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Author: 

Preciado,  A,  A. 

Title: 

Exporting  to  the  world 

Place: 

New  York 

Date: 

1920 


V 

.  1 


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Preciado,  A  JL 

Ea^rting  to  tiiie  world:  a  manual  of  practical  export 
|MMHppio  are  interested  or  engaged  in  foreign  trade, 
IqVBL  Preciado  ...  New  York,  The  James  A.  McCann 
company,  1920. 

xvii,  A3Q  p.  front,  jfklbtB,  fold,  nap,  fold  lomia.  23**. 


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EXPORTING 

TO  THE  WORLD 


A  Manual  of  Practical  Export 
for  All  Who  Are  Interested 
ixr  Engaged  in  Foreign  Trade 


BY 

A.A.PREGIADO 

Farmer  Dkeetor  of  the  UnSUd  States  Government  Committee 
4n  the  BepMic  of  ChUe,  Author  of  **Ameriea'9  Monopoly  in 
Latin^meriem  Trade,"  -Foreign  Trade  «  Necmify,  "  "Bow 
MmpeH  SMpmmte  Are  Fimnm^"  ete. 


NEW  YORK 

THE  JAMES  A.  McGANN  COMPANY 

1920 


INTENTIONAL  SECOND  EXPOSURE 


E:?^  PORTING 

TO  THE  WORLD 


A  Manual  of  Practical  Export 
for  All  Who  Are  Interested 
or  Engaged  in  Foreign  Trade 


BT 

A.  A.  PRECIADO 

Former  Director  of  the  United  States  Government  Committee 
in  the  Republic  of  Chile,  Author  of  "America's  Monopoly  in 
Latin-American  Trade"  "Foreign  Trade  a  Necessity^  **  "Haw 
Export  Shipments  Are  Fkmneed^"  eU. 


NEW  YORK 

THE  JAMES  A.  McGANN  COMPANY 

1920 


In  the  preparation  of  tiiis  volume  the  author  is  indebted 
to  a  niimbcr  of  organizations  and  individuals  whose  aid  and 
co-operation  have  been  of  inestimable  value.  I  refer  to 

The  National  City  Bank,  New  York  City. 

The  Irving  National  Bank,  New  York  City. 

The  Guaranty*  Trust  Co.,  New  York  Cit>. 

The  National  foreign  Trade  Council. 

The  Business  Training  Corporation. 

The  American  Manufacturers*  Export  Association. 

The  Pan-American  Union,  Washington,  D.  C 

The  Department  of  Commerce. 

Frank  B.  Hall  &  Co. 

Dr.  E.  E.  Pratt 

Mr.  D.  E.  Delgado. 

Mr.  Maximilian  Aviles. 

Mr.  J.  W.  Sanger. 

Mr.  John  Walsh. 

Mr.  Gilbert  H.  Montague. 

Mr.  Archftald  J.  Wolfe. 

Mr.  O.  K.  Davis. 

Mr.  W.  J.  Rilw. 

Mr.  John  £.  Gardine 

Mr.  James  H.  Carter. 

Mr.AB>ert  E.  Parker. 


TABLE  OF  CONTENTS 


INTRODUCTION 


Page 

•  •  • 

•xiu 


Chapter  I 

PRINCIPLES  OF  EXPpRT  TRADE   

Exporting  not  as  difficult  as  many  suppose  it 
to  be.  Same  business  principles  govern  world 
over.  Unfamiliar  conditions  in  exporting  must 
be  met.  Success  in  exporting  is  measured  by 
seriousness.  '  ^ 

~  Chapter  II  | 

PROBLEMS  CONFRONTING  THE  EXPORTER  . . 

Problems  confrontiiig  the  Exporter.  Study  of 
maiicet  G<^nditions  an  essentifil  requirement 
Some  factors  governing  export  t^de.  Manufac- 
turer's aiiii  should  be  to  pleasel  the  customer. 
QuaHty,  not  pricei,  det^nrfiTIf ft  t"^**^  Other 
factors  that  govern  export  tra^ 


I 


'hapter  III 


METHODS  OFj  EXPORTING  .... 

Selling  methods  involved  in  e 
Using  travelling  nien  to  develop 
ing  trade  by  corresf>ondence.  A 

means  of  |  developing  business.  

Commission  house  as  zp.  exporter. 


)rting  direct, 
ide.  Develop- 


vei 


merchant. 


le  Export 
The  export 


Chapter  IV 

ORGANIZATION  OF  EXPORT  DEPARTMENT 

Export  department  need  not  be  an  expensive 
affair.  Selecting  an  export  manager  for  the 
business.  Some  one  in  authority  as  executive 
head.  Where  is  export  department  to  be  estab- 
lished? Essential  units  in  txj^rt  department. 


17 


\ 


24  I 


Vll 


CONTENTS 


Chapter  V 

THE  TRAVELUNG  SALESMAN  OVERSEAS  M 

Manufacturer  judged  by  man  in  the  field. 
Necessary  qualifications  of  travelling  salesman 
abroad.   Preparations  necessary  for  trip  abroad. 
)     Expenses  of  travelling  salesman.    Licenses  re- 
/      quired  in  foreign  countries.    The  combination 
-      travelling  salesman. 

Chapter  VI 

CORRESPONDENCE  IN  EXPORT  TRADE   58 

Essentials  in  export  correspondence.  Careful 
translators  necessary.  Same  language  differs  in 
various  countries.  Parcel  post  as  means  of  de- 
veloping business  through  oorrespoiidence. 

Chapter  VII 

ADVERTISING  IN  EXPORT  TRADE  74 

Necessity  of  American  advertising  in  foreign 
fields.  Advertising  media  at  home  and  abroad. 
Copy  for  foreign  countries.  How  the  export  cata- 
logues should  be  prepared  and  distributed. 
Duties  on  catalogues. 

;  Chapter  VIII 

EXPORT  HOUSES    90 

The  export  merchant.  The  export  commission 
house.  How  export  houses  operate  in  foreign 
fields.  Advantages  and  disadvantages  of  export 
houses.   Future  gi  export  commission  houses. 

Chapter  IX 

FOREIGN  SALES  ORGANIZATIONS   .107 

Advantages  of  local  foreign  sales  agent.  Differ- 
ent functions  of  local  foreign  sales  agents-  Man- 
ufacturer's arrangfements  with  local  foreign  sales 
agents,  goreign  branches^.as  scUiQ^fi»  agencies. 

Chapter  X 

COMBINATIONS  IN  FOREIGN  TRADE  114 

The  Webb-Pomerene  Law.  Criticism  and  de- 
fense of  Webb-Pomerene  law.  Provisions  of  the 
measure.  How  combinations  are  made  under 
the  Webb-Pomerene  law. 


1 


CONTENTS  ix 

Chapter  XI  p^^^ 

HOW  TO;  QUOTE  PRICES  .-.142 

"One  price  to  all"  poor  policy.  System  of  dia* 
counts  shovUd  be  flexible.  Quoting  prices  in 
Ame^can  currency.  Quotation  symbols  must 
not  he  oofifused.  Meaning  of  different  s3mibols« 
Metfabds  b£  computing  C.  I.  F.  prices.  Terms 
upon  whidi  goods  are  sold. 

Chapter  XII 

FOREIGN  CREDITS  160 

Human  nature  same  the  world  over.  Why 
manufacturers  refuse  to  extend  credit  overseas. 
History  of  credit  in  foreign  business.  Credit  in- 
formation not  difficult  to  obtain.  What  is  neces- 
sary in  credit  information.  Long  credits  not 
necessary  in  export  trade.  How  to  collect  over- 
due  accounts  in  foreign  field.'"         "  ' 

Chapta:  XUI 

HANDLING  AN  ORDER  201 

Method  of  handling  orders  determines  manu- 
facturer's success.  Customer's  instructions  must 
be  closely  followed.  Confidence  of  foreign 
customer  must  be  won.  Executive  ability  in 
handling  orders. 

Chapter  XIV 

PACKING  FOR  EXPORT  211 

Inexperienced  exporters  are  to  Uame  for  poor 
packing.  Merchandise  must  be  securely  padced. 
Poor  picking  means  loss  of  orders.  Factors  to 
be  consider^  in  packing  for  export.  Kind  of 
packing  required  for  shipments  for  export.  How 
miftrbi^^pr  is  packed  for  ^^hipment.  Foreign 
requirements  must  t>e  met"  in  packing.  Effect 
of  weight  on  customs  duties.  Regulations  in 
countries  that  may  affect  packing.  How  cases 
for  export  should  be  marked. 

Chapter  XV 

HOW  SHIPMENTS  ARE  MADE  229 

Method  of  shipping  goods  from  interior. 
Routine  involved  in  shipment.  Documents 
required.  How  bills  of  lading  are  made  out. 
Shipowner's  liability  to  the  shipper.  Consular 
invoices.  Special  regulations  in  various  countries. 


X 


CONTENTS 


Chapter  XVI 

THE  FOREIGN  FREIGHT  FORWARDER  843 

Foreign  freight  forwarder  must  be  well  in- 
formed. Forwmrder  ^uld  have  his  own  ware- 
houses. How  foreign  freight  forwarder  operates. 
Methods  differ  on  the  Atlantic  side.  Large  con- 
cerns use  freight  forwarders.  What  forwarder 
charges  for  his  service.  Advantages  of  freight 
forwarders.  Criticism  against  forwarding  busi- 
ness. 

Chapter  XVII 

MARINE  INSURANCE   262 

History  of  •^inderwritcrs.'*  Principles  of 
Marine  Insurance.  What  is  written  in  Marine 
Insurance  policy.  Explanation  of  clauses  in 
Marine  Insurance  policy.  How  Marine  Insur- 
ance is  to  be  taken  out.  General  and  particular . 
average  in  Marine  Insurance. 

Chapter  XVIII 

HOW  ORDERS  ARE  FINANCED  274 

American  Exporters  have  always  enjoyed 
good  hanking  facilities.  Methods  of  financing 
shipments  for  export.  Selling  goods  on  open 
credit  bi^ais.  How  commercial  credits  are  opened. 
Acceptance  credits.  Bills  of  exchange  or  draits. 

Chapter  XIX 

AMERICAN  BANKS  IN  FOREIGN  TRADE  AND 

FOREIGN  INVESTMENTS   m 

Foreign  branches  of  American  banks.  There  ?s 
limit  to  bank's  co-operation.  Federal' Reserve  law 
permits  foreign  branches.  Credit  information 
available  to  client.  How  bank  advances  money 
against  shipments.  The  foreign  trade  department 
of  a  bank.  How  banks  extend  credit  The  Edge 
Act  to  extend  long  credits.  How  corporations 
may  be  formed  tt^er  Edge  Act  Making  in- 
vestments in  foreign  countries.  Foreign  invest- 
ments create  permanent  market 


CONTENTS  xi 

Chapter  XX  p^g^ 

OUR  MERCHANT  MARINE  333 

Europe's  advantage  in  ship  tonnage.  Spectac- 
ular growth  of  Merchant  Marine.  How  other 
countries  suffered  during  war.  Ocean  routes  that 
vessels  follow.  History  of  American  Merchant 
Marine.  Government  activities  in  shipping  in- 
dustry*   Future  of  American  Merchant  Marine. 

Chapter  XXI 

HOW  GOVERNMENT  HELPS  EXPORTER  349 

Reports  of  specified  products  valuable.  Reg- 
ular publications  of  the  Bureau.  Special  bulle- 
tins of  the  Bureau.  Bureau  serves  as  informa- 
tion depot.  How  district  offices  may  help  ex- 
porter. How  to  use  trade  opportunity  service. 
American  consuls  as  trade  representatives.  How 
to  make  use  of  consular  service.  Other  sources 
of  export  information.  Trade  journals  must  not 
be  overlooked.  A  list  of  books  exporters  should 
have  on  hand. 

Chapter  XXII 

THE  WORLD'S  MARKETS  362 

Latin  America,  Mexico,  West  Indies,  Central 
America.  South  America  as  a  field  for  American 
merchandise.  The  Near  East.  The  Far^^st.  The 
Commonwealth  of  Australia.  Africa  as  a  market 
for  American  goods.  Europe.  Canada. 

Chapter  XXIII 

FOREIGN  TRADE  MARK  REQUIREMENTS  387 

Caution.  Dangers  resulting  from  neglect. 
Trademark  regulations  vary  in  all  countries.  Re- 
quirements in  Code-law  countries.  How  the 
trademark  pirate  operates.  Marks  capable  of 
registration.  Importance  of  registration^ 

Chi^ter  XXIV 

PUBLICITY  IN  FOREIGN  COUNTRIES  398 

American  Press  associations  now  active  in 
foreign  field.  Publicity  machine  should  be  or- 
ganized. 


,  APPENDIX 
INDEX  ... 


.'03 
423 


INTRODUCTION 


America  is  beginning  to  think  internatiooally. 
We  have  asstuned  a  new  mental  attitude  towards  oar  neigh- 
bors of  other  lands  and  climes.   We  are  learning  to  deal  with 

them,  talk  with  them,  think  with  them,  and  act  with 
them  in  affairs  of  international  importance.  Broadly  speaking, 
their  affairs  are  our  affairs,  for  the  interests  of  all  are  becoming 
so  dosdy  allied  in  world  matters  that  statesmen,  with  rare  fore- 
sight, have  seen  the  necessity  of  the  creation  of  a  concrete 
organization  such  as  The  League  of  Nations,  where  all  matters 
of  dispute  may  be  sifted  lest  from  some  irresponsible  source  an 
attempt  be  made  to  ag^in  compromise  the  peace  of  the  world. 

Naturally,  the  United  States  of  America  is  sharing  m  this 
intelligent  advance  toward  international  peace  and  good  wilL 
The  Great  War  has  given  us  the  proper  inspiration  to  participate 
more  fully  in  world  matters  than  we  have  done  in  the  past.  We 
have  come  to  realize  that  such  participation — be  it  commercial, 
political  or  spiritual — \s  not  only  of  lasting  benefit  to  the  Ameri- 
can people  as  a  whole,  but  to  the  world  in  generaL  Moreover,  it 
b  a  necessary  duty,  because  of  our  industrial  and  economic  stabil- 
ity, that  we  owe  to  other  nations  whose  development  has  beca 
retarded  as  the  result  of  conditions  peculiar  to  individual  politi- 
cal units. 

We  have  become  a  great  commercial  and  industrial  power  as 
well  as  a  nation  of  tremendous  political  influence  in  world  mat- 
ters. We  no  longer  think  or  act  in  terms  of  counties  or  states  or 
sections,  but  in  terms  of  nations  and  continents.  We  arc  no 
longer  satisfied  in  confining  our  activities  and  thoughts  within 
the  boundaries  of  the  geographical  position  we  occupy  on  this 
hemisphere.  We  want  to  spread  out.  We  want  to  widen  our 
activities.  We  want  to  kngdien  our  viuon.  We  want  to  become 
acquainted  with  our  neighbors  on  tins  earth. 

Before  the  war  Europe  furnished  great  quantities  of  supplies 
to  the  rest  of  the  world.  The  wares  of  Germany,  England, 
France,  Belgium  and  Italy  vied  with  one  another  on  the  shelves 
of  foreign  buyers.  Europe  was  a  great  market  place.  It  is  none 
the  less  true,  liowever,  that  we,  also,  shared  a  large  amount  of 

•  •  • 
XUl 


INTRODUCTION 


this  business  with  our  competitors  overseas ;  .imt  the  magnitude 

of  our  commcrciaf  activities  at  home,  of  which  we  were  thor- 
oughly proud,  produced  an  atmosphere  of  self-satisfaction  so 
dense  that  few  of  us  really  knew,  much  less  cared,  how  large  our 
foreign  business  had  really  grown. 

General  ignorance  of  our  export  trade  vdume  has  Inspired 
mmy  to  say  that  "the  United  States  is  not  an  exporting  nation," 
and  that  "we  can  never  compete  with  the  pioneer  exporting 
nations  of  the  world."  We  are  not  a  great  exporting  nation  in 
the  sense  that  Great  Britain  is  because  we  do  not  depend  for 
our  existence  on  what  we  sell  to  the  world  Eng^d  must  sell 
to  the  world  in  order  to  live.  Her  home  market  is  insufficient 
to  devour  the  greater  portion  of  the  things  she  produces.  The 
same  was  true  of  Germany  before  the  war,  of  France  and  Italy 
and  Belgium.  It  was  necessary  for  these  nations  to  market  their 
articles  in  foreign  countries  because  their  own  consuming  popula- 
tions were  insufficient. 

The  reader's  doubts  as  to  America's  strength  in  export  trade 
will  be  removed  by  the  following  comparison  which  is  made 
from  the  statistics  of  the  United  States  Department  of  Com- 
merce, July,  1918,  referring  to  the  foreign  trade  of  belligerent 
and  neutral  countries  in  1913,  a  year  before  the  war,  which  most 
be  o(»isidered  as  a  normal  one: 

Export  trade  of  During  1913 

United  States   .$2,484,018,000 

United  Kingdom   3,089,353,000 

France   1,327,882,000 

Germany   2,592,239,000 

Italy   484,746,000 

Japan   314,965,000 

Now  let  us  go  back  a  few  years  to  ascertain  America's  activi- 
ties in  export  trade.  The  following  figures,  while  including  the 
exportation  of  raw  material  as  well  as  manufactured  articles, 
nevertheless  serve  as  a  striking  illustration  of  the  volume  of  oar 
foreign  business  for  the  past  fifty  years : 

Fiscal  Year.  Exports. 

1850    $144,875,726 

1875    513,442,711 

1890    857,828,684 

1900    1,394,483,082 

1905   1,518,561,666 

1910    1.744,984,720 

1911   2,049,320,199 

1912    2,204,322,409 

xiv 


INTRODUCTION 


These  figures,  dry  as  they  may  seem,  tell  the  story  of  a  brilliant 
devek^nnent  of  foreign  markets  for  American  products.  They 
refute  the  argument  that  this  country  is  not  an  exporting  nation. 
As  a  matter  of  fact,  ever  since  1874  we  have  been  selling  to  the 
outside  world  more  than  we  have  been  buying. 

It  is  also  contended  by  those  who  have  not  made  an  analysis 
of  our  export  trade  that  the  larger  part  of  this  gigantic  volume 
is  made  up  of  foodstuffs,  and  other  crude  materials — that  very 
little  of  it  represents  manufactured  articles.  We  need  only  to 
quote  the  figures  of  the  United  States  Department  of  Commerce 
for  a. period  prior  to  the  war,  as  the  abnormal  conditions  during 
the  European  conflagration  should  not  be  referred  to  in  making 
comparisons. 

Taken  from  a  Department  of  Coouneree  report  published  in 
1913  we  quote  the  following: 
"The  success  of  the  American  manufacturer  and  the  American 

workman  in  competition  in  foreign  markets  is  sharply  illustrated 
by  the  fact  that  the  exportation  of  machinery  from  the  United 
States  in  the  year  which  ends  with  June,  1913,  will  exceed  200 
millio«i  dollars,  against  less  than  75  million  a  decade  earlier,  an 
increase  of  nearly  200  per  cent,  while  the  total  exports  mean- 
time were  increasing  about  72  per  cent. 

"One  striking  feature  of  this  growth  is  the  fact  that  large 
gains  have  been  made  in  exports  of  machinery  to  the  other  great 
manufacturing  section  of  the  world,  Europe.  Of  metal-working 
machinery,  the  exports  to  Europe  amounted  to  2  3-4  miflion 
dollars  in  1902,  and  in  1912,  91-3  million;  of  automobiles,  3-4 
of  a  million  in  1902,  and  7  1-2  million  in  1912 ;  agricultural  im- 
plements, 9  million  dollars  in  1902,  16  million  in  1912 ;  sewing 
machines,  21-4  million  dollars  in  1902,  nearly  41-2  in  1912;  and 
typewriters,  2  1-2  million  dollars  in  1902,  compared  with  practi- 
cally 8  millioii  in  1912." 

The  foregmng  figures  represent  only  one  division  of  manu- 
factured articles.  Of  all  our  exports  in  18*80  only  14.78  per  cent, 
represented  our  total  manufactured  goods,  not  counting  food- 
stuffs. In  i913,  however,  the  increase  was  phenomenal  In  that 
year  our  manufactured  goods  represented  48.8  per  cent  of  our 
total  export  business.  Crude  foodstuffs  represented  32  per  cent 
of  our  exports  in  1880,  but  in  1912  a  marked  decline  to  4.6  per 
cent,  was  shown.  Foodstuffs  partly  or  wholly  manufactured 
also  took  a  tremendous  drop.  It  is  in  the  export  of  manufac- 

XV 


INTRODUCTION 


tured  articles,  therefore,  that  the  United  States  has  shown  the 
greatest  gain  in  recent  years,  even  eclipsing  the  record  of  such 
mamtfacttinQg  nations  as  the  United  Kingdom^  Germany  and 
France. 

However,  not  until  the  war  clouds  settled  in  Europe,  and  in- 
dnstry  was  iofced  to  dose  down  in  that  continent  did  we  reaiize 
tiie  vast  possibiltties  of  devdoping  the  foreign  maiioets  to  such 
an  extent  that  we  may  always  maintain  a  commercial  and  finan- 
cial supremacy  over  all  competitors.  Peoples  from  other  coun- 
tries who  had  gone  to  Europe  for  their  supplies  .in  peace  time 
now  shopped  in  the  United  States.  Our  goods  were  introduced 
for  the  first  time  in  many  lands  where  the  European  hrand  prac- 
tically had  had  the  right  of  way.  Our  commercial  travelers  for 
the  first  time  set  foot  in  strange  countries  and  intliienced  strange 
customers  to  test  our  lines.  Our  industrial  plants  made  engines 
of  destruction  by  night,  and  engines  of  peace  by  day.  Our  wares 
locmd  caigo  ^Mice  in  ships  that  sailed  the  seven  seas.  Purchasers 
for  American-made  goods  were  now  to  be  found  in  the  commer- 
cial centers  of  every  continent.  Our  business  men  began  to 
gather  at  the  behest  of  our  government  and  foreign  trade  organ- 
izations for  the  purpose  of  discussing  further  plans  for  intensive 
development  of  the  foreign  markets.  The  government's  co- 
operatioo  was  assured  in  the  gathering  of  commercial  informa- 
tion, and  other  necessary  data  for  the  use  and  disposal  of  Ameri- 
can industry.  The  study  of  export  trade  techniciiie  was  encour- 
aged in  every  section  of  the  country.  Schools  took  up  the  study 
of  modem  languages.  Universities  introduced  courses  in  For- 
eign Trade.  Newspapers,  magazines,  trade  journals— all  joined 
m  the  popokr  cry  of  the  day,  "Let* s  go  after  foreign  business.** 

The  old  days  are  gone.  Pre-war  conditions — economical,  in- 
dustrial, and  political — have  given  away  to  an  awakened  inter- 
national conscience.  The  tremendous  shuffle  that  the  terrible 
war  caused  wreaked  havoc  with  the  old  order  of  things.  The 
commercial  coiter  of  gravity  that  had  rested  in  the  United  King, 
dom  for  centuries  has  now  shifted  to  America.  The  American 
dollar  is  becoming  as  well  known  the  world  over  as  the  British 
pound  sterling. 

It  has  been  contended  that  with  the  establishment  of  peace  in 
Easogt  the  United  States  will  slowly  hut  surdy  lose  her  hold  on 
those  customers  who  had  been  aocnstomed  to  buying  goods  in 
fht  CM  World  before  the  war.    As  these  lines  are  written 

xvi 


INTRODUCTION 


Europe  is  still  in  a  chaotic  stage.  In  view  of  Ihe  wanton  destruc- 
tion that  the  war  wrought  it  seems  doubtful  that  a  rapid  return 
to  normal  conditions  is  possible — and  in  this  readjustment  the 
assistance  of  the  United  States  is  necessary. 

Regardless  of  the  loss  of  a  certain  volume  of  business  which 
American  manufacturers  may  experience  as  Europe  returns  to 
its  peaceful  labors,  the  preservation  of  a  tremendous  e3qK>rt  trade 
is  practically  assured  for  this  country.  The  remarkable  growth 
of  our  exports  during  the  war  period  has  served  a  double  pur- 
pose. It  has  advertised  American-made  goods  to  new  customers, 
and  it  has  afforded  foreign  buyers  the  oppcntunity  of  comparing 
the  merits  of  the  brands  that  come  from  America  with  tlu>se  of 

■ 

our  competitors.  The  success  which  we  shall  attain  in  holding 

our  share  of  the  world  business  will  depend,  not  so  much  upon 
our  ability  to  produce  in  tremendous  quantities,  but  upon  our 
ability  to  make  the  superior  quality  of  an  American-made  article 
the  distinguishing  characteristic 

The  American  "Renaissance'*  of  exporting  has  drawn  thou- 
sands of  men  from  their  former  labors  to  new  opportunities. 
Manufacturers  and  merchants  are  daily  looking  about  for  men 
competent  to  conduct  their  export  trade  or  to  visit  foreign  terri- 
tories to  open  op  new  business.  Needless  to  say,  there  is  a 
scarcity  of  experienced  men  in  comparison  to  the  great  demand 
that  exists.  To  thousands  exporting  is  a  new  trade  that  requires 
training  and  study.  This  volume  is  intended  to  offer  practical 
suggestions  to  manufacturer  and  merchant  as  well  as  to  the 
young  man  who  is  endeavoring  to  grasp  the  esqtort  trade  "slant" 
so  tiiat  he  may  become  better  equipped  to  engage  ^  some  phase 
of  exporting. 

These  chapters  are  based  on  extensive  travel  in  foreign  coun- 
tries as  well  as  on  personal  investigations  that  have  sent  the 
author  into  the  offices  of  many  successful  export  manufacturers 
who  have  been  extremely  generous  in  offering  thdr  experiences 
that  Aey  may  be  of  some  service  to  others. 


xvu 


Chapter  I 


PRINCIPLES  OF  EXPORT  TRADE 

EXPOBTING  NOT  AS  DIFFICULT  AS  MANY  SUPPOSE  IT  TO  BB — SaME 
BUSINESS  PRINCTPLES  GOVERN  THE    WORLD  OVER — ^UNFAMILIAR 
CONDITIONS  IN   EXPORTING   MUST  BE  MET — SUCCESS  IN  EXPORT- 
ING IS  MEASURED  BY  SERIOUSNESS. 

American  business  men  who  have  not  ventured  into  the 
field  of  exporting  are  imbued  with  the  false  idea  that  export 

trade  involves  a  business  practice  distinctly  different  from 
that  at  home,  that  the  ordinary  rules  of  conduct  peculiar  to 
the  American  business  organization  must  be  placed  aside 
when  a  plunge  into  foreign  fields  is  decided  upon,  and  that 
in  order  to  master  export  trade  technique  all  customary  prin- 
ciples must  be  dropped  so  as  to  begin  all  over  with  a  clean 
slate.  This  is  not  so.  The  theory  that  "you  cannot  teach  an 
old  dog  new  tricks"  does  not  apply  here.  The  business  man 
who  has  successfully  grasped  the  principles  of  doing  business 
at  home  will  learn  that  the  mastering  of  the  technique  of 
exporting  is  accompanied  with  very  little  difficulty. 

^'offir  Busmess  Principki 
Gavim  Uu  IVaHd  Offer 

Political  boundaries,  or  different  forms  of  government,  or 
distinct  climatic  ocfuditions  do  not  determine  the  principles 
that  govern  commercial  practice.   The  merchant  in  Canada 

or  Java  buys  goods  in  order  to  sell  at  a  profit  just  like  the 
American  merchant  who  is  pursuing  the  same  object.  A  mer- 
chant in  Argentina  is  under  a  moral  and  legal  obligation  to 
pay  for  a  bill  of  goods  purchased  in  the  United  States  or  in 
another  country,  even  though  he  is  subject  to  the  laws  of  his 
own  country  only.  His  obligation  to  pay  is  just  as  binding 
as  if  he  were  doing  business  across  the  street  from  the  foreign 
merchant  who  supplied  him  with  the  merchandise.  The  prin- 
ciple that  governs  a  sale  in  the  United  States  is  the  same  as 
the  principle  that  governs  a  sale  the  world  over.  The  heart 

1 


EXPORTING  TO  THE  WORLD 


throb  of  commerce  Is  the  "turn  over,"  whether  it  be  in  Singa- 
pore or  in  Quito.  The  stimulant  that  influences  the  "turn- 
over" is  quality,  utility  and  price.  The  merchant  depends  on 
either  of  these  essentials  ordinarily  for  the  success  of  his  busi- 
ness. To  sell  his  goods  he  must  pmvt  quality,  and  that  they 
are  of  some  service  to  the  purchaser.  The  price  must  be 
agreeable.  The  Chinese  merchant  will  not  buy  an  article 
unless  that  article  can  be  sold  to  a  customer  to  whom  it  may 
be  of  service,  or  to  whom  it  may  have  a  strong  personal  ap- 
peaL  Neither  will  be  buy  unless  he  is  quoted  a  price  that 
win  enable  him  to  sell  at  a  profit.  These  conditions  of  a  pur- 
chase or  sale  are  not  subject  to  the  vagaries  of  boundary  tines, 
different  languages  or  distinct  customs. 

Exporting  Not  as  Difficult 
as  Many  Suppose  It  To  Be 

Export  trade  is  not  difficult  to  handle.  Neither  is  it 
charged  with  such  grave  mysteries  as  those  who  fear  to  risk 
it  may  lead  one  to  bdieve.  ''How  can  I  do  business  with  a  maa 
whom  I  have  never  seen,  and  whose  methods  of  doing  business 
I  do  not  understand?"  inquires  a  merchant  who  receives  an 
order  from  a  man  in  Buenos  Aires  for  machinery.  He  forgets 
that  he  is  daily  selling  goods  to  hundreds  of  customers  he  has 
never  seen  in  his  own  country.  He  turns  down  the  order,  yet  the 
very  same  day  he  instructs  his  staff  to  fill  an  order  for  a  stranger 
in  California  who  is  known  to  him  only  through  correspondence. 

What  fri^tens  the  merchant  in  refusing  the  order  from  far- 
away Argentina? 

It  is  ignorance  of  the  mechanics  that  would  be  involved  in  the 
transaction.  It  is  the  risk  that  he  fears  he  may  have  to  take  in 
accepting  the  order.  He  knows  nothing  about  Argentina.  To 
him  it  is  a  strange  land.  The  language  is  not  his  own.  Shipment 
of  goods  to  a  customer  thousands  of  miles  away  does  not  appeal 
to  hun,  and  the  qnestioii  of  payment  is  disturbing. 

In  doing  business  with  a  maa  in  Calif omia,  however,  the  mer- 
diant  corresponds  in  the  English  language.  He  is  in  close  touch 
vrith  his  customer,  although  he  may  not  know  him  personally.  He 
may  be  able  to  converse  with  him  over  the  long  distance  tele- 
phone or  send  him  a  telegram  and  receive  an  answer  in  a  com- 
paratively short  time.  He  has  an  adequate  idea  of  the  maricet 
in  tiiat  state.  He  knows  how  to  obtam  his  mon^  in  payment 
for  his  goods.  Ahho^gh  his  cnstomer  is  many  miles  away  he 


PRINCIPLES  OF  EXPORT  TRADE  8 


feds  a  sense  of  security  from  loss  because  his  shipment  is  subject 
to  the  same  conmiercial  laws  with  which  he  is  entirdy  familiar. 

Moreover,  he  has  no  customs  regulations  to  worry  about.  He 
knows  only  one  money  standard — and  that  is  the  gold  standard! 
of  the  United  States.  As  a  rule  the  American  business  man  is 
conservative  when  it  comes  to  making  radical  departures  from 
a  set  policy.  Anything  that  involves  the  incorporation  of  new 
details  into  the  routine  of  the  business,  and  that  b  not  in  accord 
with  the  established  procedure,  may  im^te  antagonism  at  first 
Going  in  for  exporting  is  not  a  revolutionary  act  that  decrees 
the  death  sentence  upon  the  set  principles  of  business  at  home. 
It  is  merely  the  determination  to  go  after  new  business — ^to 
broaden  the  business  vision  and  scope  of  the  American  merchant 
or  manufacttuv  by  acquiring  a  krowledge  of  foreign  countries 
and  an  idea  of  the  possibilities  of  those  countries  for  tibe  develop- 
ment of  American  commerce. 

With  little  study  and  education  on  essential  details  regarding 
foreign  trade  the  merchant  who  receives  an  order  for  machinery 
from  Argentina  may  turn  it  into  cash.  He  need  not  worry  about 
the  diflficulty  of  communicating  with  his  customer.  A  cable  to 
Buenos  Aires  will  reach  its  destination  almost  as  soon  as  a  tde- 
gram  to  California.  If  he  wishes  to  communicate  with  his 
customer  by  mail  there  are  any  number  of  competent  translators 
at  all  the  principal  ports  who  can  handle  his  correspondence  in 
the  language  required.  The  collection  of  money  has  been  re- 
duced to  a  very  simple  undertaking  within  recent  years.  The 
principal  American  banks  in  all  our  large  cities  are  fully  equipped 
to  take  charge  of  collections  in  countries  where  'the  merchant 
may  have  bills  outstanding.^  It  will  be  seen,  therefore,  that  the 
merchant  will  experience  little  or  no  difficulty  in  doing  business 
with  a  customer  in  Argentina  in  ^te  of  sudi  apparent  barriers 
as  difference  in  language,  customs  and  laws. 

Unfamiliar  CandiHons  im 
Exporting  Must  Be  Met 

In  venturing  into  foreign  cocmtries  in  the  search  of  new  cus- 

1 — Mr.  J.  McCurrah,  vice-president  of  the  Continental  and  Commercial  Bank,  in 
■B  tddrew  More  tfie  Sfactfi  Natimiftl  Fordgn  Trade  Conventkm  in  Chkago,  April 
24lh,  1919,  said:  **A  careful  analysis  of  the  world's  international  business  wiU 
show  that  the  percentage  of  losses  on  foreign  sales  has  been  very  much  less  than 
the  percentage  of  losaea  fai  dooaeatie  transaetioiia.  While  it  is  generallj  understood 
that  the  American  manufacturer  must  of  necessity  be  prepared  to  grant  longer 
time  credits  than  we  have  granted  in  the  past,  these  credits  will  be  readily  financed 
bj  the  American  bank%  if  the  exporter  will  give  the  bank  an  opportunity  to  inves- 
tiftte  the  flMmU  m4  SmumM  atvidiiv  of  tlM  tmim  hum*" 


4 


EXPORTING  TO  THE  WORLD 


tomers,  however,  the  merchant  will  learn  that  before  he  can  make 
any  strenuous  efforts  to  develop  a  given  market  he  must  familiar- 
ize himself  with  a  series  of  details  such  as  have  been  foreign  to 
his  business  routine  in  the  domestic  fidd.  His  foreign  corre- 
qioiMknce  methods  may  disturb  htm  at  die  b^finning.  His  busi- 
ness may  require  correspondence  in  several  different  languages. 
This  may  mean  the  addition  of  competent  translators  to  his 
organization.  The  difficulty  of  communicating  promptly  by  mail 
with  his  overseas  customer  may  tempt  him  to  abandon  his  even 
ttmper  at  tunes.  It  takes  a  letter  much  longer  to  readi  its  desti- 
natkm  in  a  foreign  country  than  it  does  at  home. 

Each  individual  country  has  its  own  problems.  Climatic  con- 
ditions may  limit  the  merchant's  development  of  the  market  if 
he  is  engaged  in  selling  seasonable  goods.  He  may  be  forced  to 
alter  his  packing  methods  in  order  to  meet  Ac  requirements  of 
his  foreign  customer.  He  must  determme  a  price  policy.  Is  he 
to  charge  more  for  his  commodities  in  foreign  countries  or  is 
he  to  make  the  same  charges  that  he  asks  his  domestic  customers 
to  meet,  or  is  he  to  sell  at  a  lower  figure  than  he  does  at  home? 
He  must  also  decide  whether  he  is  to  give  reasonable  credit  to 
his  foreign  purchaser— a  veiy  inqportam  phase  of  aqxMtii^  that 
requires  eariy  settlement*  The  mMiod  of  obtaining  payment  for 
his  goods  may  confuse  him  to  some  extent,  but  as  has  already 
been  stated,  investigation  and  study  of  existing  ways  and  means 
will  convince  the  merchant  that  it  is  not  as  difficult  as  it  may 
seem.  He  will  learn,  also,  of  new  money  values,  and  that  the 
American  dollar  does  not  always  maintain  its  par  value  in  foreign 
countries.  He  win  also  become  familiar  with  shipping  details 
such  as  are  peculiar  to  maritime  commerce  only.  These  are  only  a 

2— "To  ascribe  the  reluctance  of  many  /merican  aamifactarers  to  grant  to 
foreign  customers  credit  terms,  regarded  by  Iftie  latter  as  reasonable,  to  'ignorance' 
it  nnfair  in  many  cases.  It  has,  indeed,  happened  that  a  manufacturer  has  refused 
to  affcamawdate  in  tiM  auttter  of  eradk  a  hooaa  of  aboolnteiy  assured  standing 
iiaiply  bccanae  *cash  agaiaat  documents  1m  Ncir  Yock*  it  Ida  rait,  bat  moot  Aacri- 
can  manufacturers  declining  to  do  business  abroad  on  a  credit  basis  do  so  beeaaao 
they  feel  that  in  some  way  or  other  they  are  not  equipped  for  this  class  of  busineaa. 
The  difficulty  of  obuining  reliable  credit  information  regarding  the  financial  stand- 
iat  of  ievdgB  enMooun,  ^  danger  of  aoC  reeeiTtof  a  sufficiently  timely  warning 
of  any  cbange  in  Mr  ftttadal  coaditioa,  flit  fear  of  wfoondod  oomplaints,  un- 
warranted deductions  and  onraaaoaable  delays  in  payawat,  At  innintribiBlj  of 
obtaining  justice  in  commercial  litigation  in  cerUin  undeveloped  countries,  aad  tiM 
lUgh  costs  of  such  Utigation  in  other  countries,  and,  finally,  the  consideration  that 
a  manufacturer  who  bas  ioTettcd  bis  caj>ital  in  his  plant  and  natc^its  depends 
naturally  npon  a  reasonable  speedy  rtlara  oa  bit  iavatlBMBt  aad  caaaol  vndertako 
to  finance  a  large  number  of  importers  in  foreign  countries — all  these  are  wei^y 
arguments  for  prudence." — Archibald  J.  Wolfe,  "Foreign  Credits,"  publication  at 
Special  Agents  Series  of  tihe  Bureau  of  Foreign  and  Domestic  Commerce,  1913. 


PRINCIPLES  OF  EXPORT  TRADE  5 


few  of  the  new  conditiofis.tfaat  will  ariac  in  the  development  of 
the  merchant's  export  business. 

Success  in  Exporting  Is 
Measured  by  Seriousness 

The  seriousness  witli  which  the  merchant  is  disposed  to  enter 
the  foreign  field,  and  his  willingness  to  take  such  risks  as  he  has 
been  imfamiHar  with  at  home  should  be  carefully  tested  before  a 
decision  to  go  in  for  exporting  is  made.    If  the  merchant's 
seriousness  is  measured  by  a  desire  to  "dump"  a  surplus  lot  of 
worthless  merchandise  on  an  unsuspecting  foreign  public  without 
considering  the  future  consequences,  then  he  had  better  devote 
his  efforts  to  the  home  market,  where  such  practices  will  find 
encouragement  m  certwn  sections  only.  While  such  "dumping" 
tactics  may  prove  successful  the  first  time  in  a  iomga  country, 
disaster  will  surely  follow  a  second  attempt.  This  docs  not  mean, 
of  course,  that  there  are  no  markets  for  cheap  goods  in  foreign 
countries.  There  are  several  of  them.  Reference  is  here  made 
to  articles  of  a  hi^  con^tive  character  where  quaUty  and 
utility  are  the  prime  factors  that  detemune  their  success.  The 
workmanship  of  these  should  not  be  sacrificed  in  order  to  make 
the  price  extremely  attractive  to  the  foreign  purchaser.  The 
world  should  not  be  a  dumping  ground  for  worthless  stocks. 
What  is  not  good  for  the  American  people  should  not  be  good 
for  the  foreign  buyers.  To  be  successful  the  American  manu- 
facturer or  merchant  must  lay  down  his  foundaticm  securely. 
Surely  he  cannot  attain  this  object  by  using  flimsy  material  in  the 
effort  Competition  in  foreign  markets  is  keen.  The  efficiency  of 
the  American  workman  is  matched  against  the  efficiency  of  the 
world's  greatest  artisans.  The  American  workman  has  proven 
his  efficiency.   He  has  proven  his  ability  to  make  articles  of  a 
quality  that  has  created  a  world  demand.  In  order  to  maintain 
this  demand  we  must  continue  to  produce  with  the  same  skill 
that  has  marked  our  successes  in  the  past 


Chapter  II 

PROBLEMS  CONFRONTING  THE  EXPORTER 

Study  of  market  conditions  an  essential  requibembnt-* 
Some  factors  governing  extokt  tkadb— Manufacturer'^  aim 

SHOULD  BB  10  PLBASB  TBB  CUSTOMTO  QuALTTY,  NOT  PRICES,  DE- 
TERMINES success—Other  factc»s  that  govern  export  trade 

Before  deciding  to  engage  in  export  trade  the  manufacturer 
must  settle  in  his  own  mind  a  number  of  matters  that  may  affect 
a  final  decision.  He  must  decide,  first  of  all,  whether  he  really 
desires  to  do  exporting  on  a  pertnaneiit  basis.  "Shall  I  stay  in 
permanently  or  shall  I  stay  out  permanently?^  is  a  question  he 
must  be  able  to  answer  before  taking  the  first  step  forward.  The 
cumulatiye  value  of  exporting  is  the  element  that  must  survive 
the  acid  test.  Isolated  effort  is  worse  than  none  at  all.  Unless 
a  manufacturer  is  in  a  position  to  continue  exporting  on  a  per- 
manent basis  he  had  better  confine  himself  to  the  dotnesttc 
market,  as  spasmodic  attempts  to  awaken  interest  in  fordgn 
fields  are  not  only  painfully  expensive  but  wastef ully  tiouble- 
some  in  the  conduct  of  business  at  home, 

IVhat  Deciding  to  Go  in 
for  Export  Trade  Means 

When  the  manufacturer  decides  to  sell  his  goods  abroad  it  is 
taken  for  granted  that  he  has  a  sufficient  amount  of  capital  to 
lay  aside  for  preliminary  devebpment,  although  it  is  not  neces- 
saiy  to  use  a  large  fund  for  sudi  purpoaes.  As  the  monetary 
requirements  of  each  mdivkhial  manufacturer  depend  on  his  own 
peculiar  wgani^tion,  and  the  scope  of  his  activities  in  foreign 
fields,  it  is  absolutely  impossible  to  name  an  arbitrary  figure  as 
representing  the  initial  capital  outlay  that  would  be  required 
The  amount  of  capital  for  foreign  trade  development  d^pmdB, 
just  as  it  does  at  home,  on  the  extent  of  the  activities  oontem- 
plaled,  and  the  condition  of  the  mvestor's  surj^us.  No  sane 
business  man  will  recklessly  devote  a  large  amount  of  his  acces- 
sible capital  in  testing  new  markets.  A  well  defined  itlea  of  the 

6 


PROBLEMS  CONFRONTING  THE  EXPORTER  7 


capabilities  and  requirements  of  those  markets  is  the  first  essen- 
tial of  the  practical  business  man.  Therefore,  in  deciding  to  go 

in  for  export  trade  the  manufacturer— it  is  taken  for  granted— 
has  made  a  preliminary  survey  of  the  entire  situation.   First  of 
an  he  has  carefully  analyzed  his  own  situation.  He  has  learned 
that  he  can  increase  his  factory  output  by  efficient  management 
without  extravagantly  increasing  his  overhead  expenses.  He  has 
learned  that  his  product  can  be  sold  in  other  countries  where 
the  degree  of  civilization  is  advanced.    He  has  carefully  looked 
over  the  field  for  competent  men  to  take  charge  of  his  exporting, 
and  is  satisfied  that  he  can  find  fairly  competent  employes  to 
entrust  with  such  a  ddicate  undertaking  as  eaq^  trade.  He 
has  made  a  close  study  of  laws,  regulations,  ratiesi  custotns 
requirements,  consular  documents  and  hundreds  of  other  details 
peculiar  to  the  exporting  business.    Deciding  to  do  exporting 
means  the  mastering  of  all  these  details,  along  with  many  others 
whidi  will  be  taken  up  m  subsequent  chapters. 

Study  of  Market  Conditions 

an  Essential  Requirement 

Good  business  judgment  should  dictate  a  careful  survey  of 
market  conditions  in  the  countries  where  the  manufacturer  is 
contemplating  the  development  of  a  demand  for  his  articles.  The 
success  of  an  article  at  home  should  not  serve  as  a  barometer  that 
will  determine  its  salability  overseas.  The  American  people  spend 
minions  in  chewing  gum  every  year,  yet  this  is  not^  indication 
that  the  article  would  "go  big"  in  foreign  countries.  The  chewing 
gum  habit  has  not  at  this  writing  been  acquired  universally. 
Breakfast  foods,  while  enjoying  a  big  sale  in  the  United  States 
and  in  Europe,  are  not  very  pq;>ular  in  Latin  America,  where 
the  people  by  habit  confine  themselves  to  coffee  and  rolls  as  the 
first  meal  of  the  day.  Again,  climate  may  have  a  direct  bearing 
on  the  success  of  a  manufacturer's  article  abroad.  The  merchant 
who  endeavors  to  market  electric  fans  in  Punta  Arenas,  Chile, 
or  woolen  underwear  in  the  Panama  Republic  is  doomed  to  lose 
some  money.  He  should  not  fail  to  study  the  climatic  condi- 
tk>ns  in  foreign  countries.  With  little  effort  he  could  have 
learned  that  the  citizens  of  Punta  Arenas  are  already  blessed 
with  a  cool  breeze  that  is  practically  perpetual,  thereby  dispense 
ing  with  the  necessity  of  artificial  "air,"  while  the  people  of 
Panama  find  plenQr  of  comfort  in  a  certain  style  of  underwear 


6 


EXPORTING  TO  THE  WORLD 


whose  material  and  weight  are  m  keeping  with  the  climatic  con- 
ditions peculiar  to  that  coontry.  Ignorance  of  weather  conditions 
in  Rio  de  Janeiro  caused  a  merchant  the  loas  of  coottderahle 

money  a  few  years  ago.  He  had  endeavored  to  unload  a  con- 
signment of  snow  plows  on  an  innocent  public.  The  study  of  an 
atlas  for  a  few  moments  would  have  saved  this  merchant  con- 
stderahle  trouble. 


Some  Factors  Governing 
Export  Trade 

Needless  to  say,  the  manufacturer  must  know  what  changes 
must  be  made  in  his  article  in  order  to  meet  the  requirements  of 
his  foreign  customer.   In  order  to  do  this  he  must  know  more 
than  dunatic  conditiims  or  habits  of  the  people.  He  must  beomie 
familiar  with  special  requirements  and  peculiarities  of  the  particu- 
lar markets  he  wishes  to  exploit.   Failure  to  take  this  precaution 
will  find  him  attempting  to  dispose  of  articles,  the  manufacture 
of  which  did  not  take  into  consideration  certain  factors  govern- 
ing their  sale.  For  instance,  in  many  countries  of  the  world  the 
Hi^tric  system  of  weights  and  measures  is  prescribed  by  law. 
The  American  manufacturer  who  ships  a  consignment  of  instru- 
ments to  a  country  where  distance  is  read  in  terms  of  meters 
and  kilometers,  and  weights  in  terms  of  grams  and  kilograms, 
without  rha«gi"g  the  reading  thereon  so  as  to  harmonize  with 
the  prevailing  system,  would  be  oommittii^  a  grievous  blunder. 
Neither  should  he  attempt  to  ship  typewriters  to  countries  idiere 
the  prevailing  language  is  Spanish  without  first  equipping  them 
with  characters  peculiar  to  that  tongue.  This,  of  course,  involves 
the  problem  of  changing  the  manufacture  of  these  articles  in  a 
slight  degree  to  meet  foreign  requirements.  It  is  an  eacperience 
that  has  been  successfully  met  by  Amerkan  flttnufactumi  who 
have  ahered  their  domestic  plans  to  comply  with  the  requirements 
of  the  foreign  markets.    It  is  one  of  the  essential  factors  that 
must  be  considered  in  venturing  into  foreign  trade.  Probably 
too  much  unjustifiable  criticism  has  been  directed  at  American 
mannfacturers  who  have  refused  to  make  a  change  in  the  mami> 
factnre  of  thdr  product  in  order  to  comf^y  with  certain  require- 
ments  in  forrign  markets.  There  are  certain  automobile  mami- 
faclurers  in  this  country  who  refuse  to  change  the  position  of 
the  drive  from  the  left  to  the  right  in  order  to  comply  with  the 
wquiiements  of  some  Latin-American  countries  where  the  chauf - 


PROBLEMS  CONFRONTING  THE  EXPORTER  9 


f  eur  turns  to  the  lett  instead  of  to  the  right  This  may  possibly 
be  due  to  stubbornness  or,  perhaps,  to  the  impossibility  of  mak- 
mg  the  change  without  incurring  considerable  loss.  It  is  possible, 
alsot  that  the  buyers  of  automoMes  asking  for  these  changes 
ate  unwimng  to  pay  the  extra  costs  that  may  be  involved.  It 
must  be  remembered  that  the  basis  of  our  industrial  wealth  rests 
on  our  policy  of  quantity  production.  While  it  is  possible  to  turn 
out  a  tremendous  amount  of  work  from  a  factory  that  is  geared 
up  to  produce  m  enormous  quantities  at  a  very  low  cost,  yet  a 
sHgfat  deviatkm  frmn  the  methods  of  that  production  is  Ukely 
to  mcrease  the  price  beyond  all  proportion.  Hundreds  of  manu- 
facturers  in  this  country  have  turned  down  big  orders  from  for- 
eign buyers  simply  because  they  were  unable  to  make  the  neces- 
sary changes  in  a  product  and  at  the  same  time  secure  themselves 
against  h)6S.  It  is  doubtful,  however,  if  any  manufacturer  would 
turn  down  an  order  regardless  of  the  minor  changes  required  if 
he  were  assured  of  reasonable  profits. 

There  is  not  an  article  produced  by  an  American  manufacturer 
that  may  not  be  sold  in  foreign  countries.  It  is  not  so  much  the 
problem  of  finding  something  that  will  sell  overseas  as  much  as 
aiCfrty"*"g  under  what  conditions  an  article  may  be  sold  and 
where  it  may  be  sold  to  the  best  advantage.  Take  ^  maker  of 
straw  hats,  for  instance.  Straw  hats  have  a  wide  fordgn  market, 
but  it  is  absolutely  essential  for  the  manufacturer  to  study  cli- 
matic conditions  in  the  various  countries  before  he  can  intelli- 
gently dispose  of  his  goods.  By  taking  advantage  of  the  dif- 
ferent seasoDi  he  will  find  a  sale  for  his  hats  for  pcactically  the 
entire  year.  In  countries  south  of  the  equator  wmter  is  on  its 
way  when  the  people  of  the  United  States  are  basking  in  the  sun- 
shine of  an  early  spring.  When  the  straw  hat  selling  season  is 
over  in  this  country  it  is  about  to  start  in  Argentine,  Chile  and 
Uruguay.  The  antomdlHle  trade  and  clothing  business  enjoy  a 
somlar  advantage. 

ManufacHtrer's  Aim  ShoM 

Be  to  Please  the  Customer 

We  sell  in  order  to  make  a  profit.  The  customer  is  interested 
in  an  article  which  he  has  accepted  because  it  has  an  element  of 
Utility  to  him.  It  has  a  degree  of  quality  that  is  satisfactory,  and 
the  price  is  reasonable.  Generally  speiddng,  it  makes  no  differ- 
ence to  the  purdiaaer  where  the  artide  conies  from  as  kiag  as 


10 


RTING  TO  THE  WORLD 


it  meets  liis  leqairements.  The  maiitifacturer  cannot  impose  an 
article  upon  an  .unwilling  customor  and  expect  to  build  up  his 

trade  on  that  basis.  We  must  remcnibcr  that  the  development  of 
a  successful  export  business  does  not  depend  so  much  upon  our 
facilities  to  supply  the  world  with  our  commodities  as  it  does  upon 
our  abiH^  and  willingness  to  please  our  customers.  This,  as 
has  been  txphaatd  already  in  this  chapter,  may  invohre  a  read j  ust- 
ment  of  factory  processes,  and  this  question  will  require  disposal 
by  the  proper  executive  only.  But  a  definite  policy  must  be 
established  at  the  outset  "Shall  I  change  my  methods  to  meet 
fm^gn  requirements  or  shall  I  endeavor  to  sell  what  I  have 
already  manufactured?**  This  is  the  question  that  the  manufac- 
turer must  settle  definitely.  Under  date  of  December  7,  1915, 
at  the  convention  of  the  National  Association  of  Manufacturers 
in  New  York  City,  Dr.  E.  E.  Pratt,  former  chief  of  the  Biureau 
of  Foreign  and  Domestic  Commerce,  made  this  statement:  "I 
wonder  if  most  of  the  manufacturers  who  intend  to  embark  in 
an  export  trade  realize  that  a  definite  policy  must  be  adopted  at 
home  as  well  as  in  the  foreign  field.  As  a  matter  of  fact,  some 
of  the  most  important  decisions  which  the  manufacturer  can 
make  with  reference  to  foreign  trade  are  to  be  made  at  home 
with  reference  to  his  home  organization,  with  reference  to  his 
methods  m  the  United  States,  with  reference  to  production  in  his 
plant,  and  with  reference  to  niatters  whidh  are  seemingly  not 
directly  in  the  foreign  department 

factors  Determining 
Success  of  Mmmfacturers 

"Are  you,  as  a  manufacturer,  g<(Hng  to  manufacture  for  export, 

or  are  you  going  to  export  what  you  have  manufactured?  The 
difference  between  these  apparent  similar  statements  is  the  dif- 
ference between  success  and  failure.  I  have  already  referred  to 
die  plow  manufacturer,^  and  I  would  like  to  cany  that  illus- 
tration a  Uttie  farther.  I  know  of  one  plow  manufacturer  who 

1.  "Plows  vaty  not  so  much  with  the  taste  of  the  plowman  as  with  the  char- 
acter of  the  soil  in  w4iich  the  plow  will  be  used  and  the  species  of  animal  that  will 
draw  the  plow.  Plowi  oC  differeent  type*  an  med  hn  tfM  4ifte«Bt  MelioM  of  ^hm 
Uakdl  States.   Simfluly,  ylm  of  dMnont  types  ors  used  in  diffsreat  oonatries. 

Ths  MiMofirtiirrr  therefcwne,  must  find  out  the  soil  conditions  and  mtist  export  to 
a  certain  market  the  type  of  plow  which  the  soil  conditions  there  require." — Dr. 
E.  E.  Pratt,  former  chief  of  the  Bureau  of  Foreign  and  Domestic  Commerce,  in 
•  Statement  before  the  International  Trade  Conference  in  New  York  City  in  1915.. 


PROBLEMS  CONFRONTING  THE  EXPORTER  11 


sent  a  man  to  Aiigentina.  It  was  his  business  to  get  the  facts 
about  conditions  there.  He  actually  worked  in  the  helds.  He 
found  out  exactiy  the  land  of  plow  that  was  suited  to  that  par- 
ticular trade  and  to  those  peculiar  soil  conditions.  He  sent  a 
cablegram,  at  a  cost  of  many  hundred  dollars,  instructing  the 
manufacturer  in  detail  as  to  changes  which  must  be  made  in 
order  to  meet  the  conditions  in  Argentina.  The  factory  superin- 
tendent objected.  'We  can't  make  those  changes/  he  said  to  the 
manufacturer;  *it  would  involve  the  changing  of  all  om:  manu- 
facturing methods/  But  the  manufacturer  knew  his  business 
and  he  knew  his  man,  and  so  he  said  to  the  superintendent:  *1 
have  confidence  in  the  man  I  sent  to  Argentina,  and  the  plows 
for  that  market  are  to  be  made  in:  the  way  which  he  desires. 
You  f dk>w  his  instructions.'  The  result  was  that  a  large,  prc^t- 
able  business  was  built  up  in  Argentina.  That  is  what  I  mean 
when  I  refer  to  a  home  export  policy,  and  this  illustration  also 
shows  the  need  of  executive  direction." 

Altering  of  Product 
May  Be  Required 

It  is  of  prime  importance,  the  foregmng  experience  diows, 
that  the  manufacturer  should  realize  from  the  start  that  export 

trade  may  involve  radical  changes  in  the  making  of  his  product, 
and  that  he  must  either  be  prepared  to  make  them  and  cater  to 
the  markets  he  desires  to  expk>it  or  refuse  to  aUer  his  domestic 
poliqr  and  therefore  keep  away  from  ioraga  trade.  This  prob- 
lem has  been  overcome  by  large  plants  whose  quantity  produc* 
tion  has  enabled  them  to  sell  to  the  world  at  a  very  low  price. 
Henry  Ford's  automobiles  are  known  in  practically  every  section 
of  the  globe  where  automobiles  are  in  use.  However,  Ford  has 
had  to  alter  the  drive  of  his  automobile  from  the  left  to  the  right 
in  order  to  meet  the  requirements  in  certain  Latin-American 
cotmtries.  In  Chile,  for  instance,  the  driver  must  turn  to  the 
left.   Therefore,  he  must  have  his  drive  on  the  right. 

A  striking  illustration  of  a  manufacturer's  desire  to  please  is 
related  in  "Export  Trade,"  a  New  York  export  joumaL  It  tells 
llie  ttoiy  of  a  German  saksgman  who  was  able  to  discover  a  weak, 
ness  in  a  customer  for  a  pocket  knife  with  an  illustrated  handle. 
The  story  /was  told  by  an  American  salesman.  It  says :  "On  one 
occasion  while  traveling  through  Mexico  I  purchased  a  pocket 
knife  which  had  attracted  my  attention  because  of  the  pretty 


n  EXPORTING  TO  THE  WOiO-D 


medallion  in  the  handle,  displaying  the  face  of  a  dark-e]red 
senorita.  I  thought  I  had  captured  a  sample  of  Mexican  cutlery, 
but  my  delight  did  not  last  long.  A  few  days  later  I  happened 
to  meet  a  Gennan  drummer,  and  on  showing  him  the  knife  as 
a  specimen  of  Mexican  skill  he  laughed  heartily.  'Why,  I  sold 
those  knives  myself,'  he  said.  They  were  made  in  Germany/  " 

What  has  been  said  does  not  necessarily  mean  that  the  manu- 
facturer must  keep  on  continually  changing  or  altering  his  article 
to  meet  foreign  requirements.  Such  practice,  it  will  be  found, 
is  rather  an  exception,  and  not  the  usual  rule.  However,  the 
ai'erage  American  manufacturer  will  listen  to  reason,  and  once 
cmivinced  that  he  can  profitably  change  his  product  in  order  to 
cater  to  the  specific  requirements  of  a  certain  market  he  will  be 
the  last  person  to  turn  down  the  proposal. 

The  habits  of  hundreds  of  years  may  not  be  changed  over- 
night by  an  enterprising  American  traveling  salesman,  or  anyone 
else  for  that  matter.  It  has  been  tried  without  much  success. 
But  when  the  people  of  a  foreign  coontry  have  been  accus- 
tomed to  an  article  of  an  inferior  type  it  should  be  within  the 
bounds  of  discretion  to  endeavor  to  introduce  one  of  superiority 
and  not  a  poor  imitation  that  merely  conforms  to  the  customs 
of  the  people.  For  instance,  the  author  has  seen  some  ponderous 
keys  in  South  America,  so  large  that  they  require  a  joint  in  the 
center  to  permit  doubling  up  in  the  pocket  They  were  made  in 
England.  The  practical  American  lock  and  key  are  far  superior 
to  the  British  make,  and  the  wise  manufacturer  will  not  only 
refuse  to  follow  the  British  style  but  will  insist  on  showing  the 
purchaser  the  advantages  of  his  own  manufactured  ware. 

Quaiiiy  Not  Prices 
Determmes  Success 

Nothing  does  more  to  harm  our  nation's  good  name  than  the 
disposing  of  worthless  articles  bearing  the  American  trademark 
in  foreign  countries.  A  cheap  article  made  in  America  reflects 
not  so  much  upon  the  maker  of  that  article  as  upon  the  country 
as  a  whole.  During  the  war  complaints  from  new  customers 
in  foreign  countries  against  the  poor  quality  of  merchandise 
that  American  exporters  had  shipped  to  them  were  quite  numer- 
ous. This  is  true  particularly  of  South  America,  which  was  the 
objective  of  ine3q)erienced  salesmen  in  foreign  countries  during 
the  war.  These  men,  bdieving  that  the  South  Americans  woola 


PROBLEMS  CONFRONTING  THE  EXPORTER  13 


''fall  for*'  lines  that  had  had  considerable  difficulty  in  the  United 
States,  carried  along  with  them  trunk  loads  of  samples,  hoping 
to  reap  a  rich  harvest,  but  to  their  amazement  they  discovered 
that  their  intended  Latin- American  victims  were  just  as  exacting 
in  their  selection  of  merchandise  as  some  of  the  shrewdest 
American  buyers. 

Witness  the  reputation  of  a  certain  nation  in  the  Far  East. 
This  country  has  become  extremely  diligent  in  exploiting  new 
markets.  With  its  cheap  labor  and  the  use  of  cheap  materials 
it  has  been  able  to  produce  low  priced  goods  and  for  a  time  suc- 
ceeded in  disposing  of  tremendous  quantities  of  goods  to  un- 
suspecting customers.  It  is  yet  a  dangerous  contender  in  the 
world  markets,  but  its  cheap  priced  articles  failing  to  bear  up,  an 
unenviaUe  reputation  has  been  the  result  among  some  of  its 
former  buyers.  The  matter  has  become  so  serious  that  legisla- 
tion is  contemplated  to  prevent  the  exportation  of  articles  from 
that  country  which  fail  to  pass  the  test  of  quali^  before  ^  board 
of  competent  oommerdal  authorities. 

The  foreign  buyer  sedcs  quality  in  an  article  as  a  general  rule. 
The  price  is  a  secondary  consideration.  American-made  goods 
are  noted  the  world  over  for  the  skill  that  has  been  devoted  to 
their  making.  Of  course,  there  are  articles  such  as  raw 
materials  wliose  sale  depends  on  the  price  at  which  they 
are  offered  in  competitive  markets.  In  this-  classification 
such  staple  products  as  wheat,  coal,  corn  and  cotton  are 
included.  But  the  great  percentage  of  articles  mantifactuted! 
in  this  country  are  not  subject  to  competition  on  a  price 
basis.  To  further  illustrate  the  point,  we  have  in  this 
country  several  different  makes  of  automobiles,  and  watches, 
and  fountain  pens  and  typewriters.  Some  of  these  articles  do 
not  depend  on  the  reasonableness  of  the  price  for  their  pc^ular- 
ity.  The  arrival  of  a  popular  priced  car  in  the  market  did  not 
cause  the  factories  producing  the  more  expensive  cars  to  close 
down.  There  is  a  typewriter  so  cheap  in  price  as  to  be  tempting 
to  anyone  having  a  use  for  such  an  article,  yet  it  has  not  forced 
its  more  expensive  competitors  from  die  market.  The  Japanese 
government  flooded  certain  markets  witli  an  imitation  of  a  well 
known  American  fountain  pen.  The  price  was  much  lower  than 
the  American  make,  but  the  latter  kq>t  on  selling.  It  was  qual- 
ity that  brou^  remits. 


EXPORTING  TO  THE  WORLD 


Americafp-tnade  Goods 
Compete  in  Europe 

Before  the  war  our  manufacturers  invaded  some  of  the  most 
highly  developed  countries  in  Europe  from  the  point  of  industry. 

Germany  had  been  a  great  competitor  of  the  American  producer 
of  typewriters,  farm  implements,  electrical  machinery,  automo- 
Uks,  sewing  machines  and  wearing  apparel,  yet  our  merchants 
sent  their  wares  to  the  heart  of  Germany  and  successfully  com- 
peted against  artides  of  Teutonic  origin,  and  this  in  spite  of  the 
fact  that  increased  overhead  resulting  from  ocean  freights  and 
customs  duties  had  to  be  met.  Also,  our  furniture  and  shoes 
are  being  sold  successfully  in  Chile,  where  local  products  of  a 
similar  character  have  won  favor.  The  American  shoe  manu- 
facturers' development  of  the  market  in  Chile  and  other  South 
American  countries  was  made  rather  difficult  hy  the  necessity 
of  changing  the  style  of  the  product.  The  people  in  those  coun- 
tries have  been  accustomed  to  a  short  vamp  with  the  round  tip, 
a  style  hrought  over  from  France.  The  American  makers  of 
flioes  now  provide  those  countries  with  either  round  tips»  or 
pomted  tips,  which  is  peculiarly  an  American  fashion. 

The  abundance  of  CaUfomia's  grapes  does  not  prevent  Spain 
from  shipping  this  delicious  fruit  to  this  country.  After  all, 
there  is  a  certain  attraction  for  ''imported"  goods  whose  char- 
acteristics of  having  been  made  abroad  assure  it  a  ready  sale 
among  a  certain  element  of  the  native  population  regardless  of 
the  merits  or  price  of  a  locally  made  product 

''Made  in  America**  is  a  labd  that  has  woa  prestige  in  foreign 
countries.  Foreign  buyers — and  they  are  most  exacting — have 
learned  to  place  implicit  confidence  in  commodities  bearing  the 
American  trademark.  They  know  that  we  do  not  produce 
trash  here.  We  have  made  it  possible  to  put  quality  into  our 
products  through  our  hig^  devdoped  industrial  Sjrstem.  We 
have  been  able  to  effect  quantity  production  without  impairing 
quality.  We  have  mobilized  an  army  of  the  most  competent  work- 
men in  the  world,  to  whom  we  have  paid  the  highest  wages  of 
any  workmen  in  any  country.  Their  standard  of  living  has 
been  high  and  yet  we  have  been  able  to  compete  in  foreign 
markets  mfk  countries  that  have  had  the  iqiparent  advantage 
of  lower  labor  costs.  What  is  the  answer?  It  is  the  quality  of 
our  material  that  has  won  us  markets.  We  should  have  no 
faith  with  those  who  insist  that  the  reduction  of  wages  is  essen- 


PROBLEMS  CONFRONTING  THE  EXPORTER  15 


tial  to  successful  competition  against  the  cheap  labor  of  other 
countries.   The  contrary  has  practically  been  proved. 

Other  Factors  thai 
Govern  Export  Trade 

A  superficial  study  of  conditions  in  any  ghren  market  is  not 

enough.  The  manufacturer  who  is  preparing  to  extend  his 
business  overseas  should  know  as  much  about  the  territory  he 
aims  to  cover  as  far  as  essential  information  is  concerned  as  he 
does  about  the  various  markets  at  home.  He  should  not  only 
study  the  history  of  the  country — ^which  serves  as  a  basis  for 
intelligent  observation — but  also  the  d^jrce  of  civilization  to 
which  the  inhabitants  of  the  country  are  accustomed.  A  manu- 
facturer of  pianos  may  not  find  a  very  extensive  market  for  his 
wares  in  Haiti,  but  a  careful  study  of  the  civilization  of  Aus^ 
tralia  will  assure  him  of  success  in  that  line  in  certain  sections 
of  that  country.^  Needless  to  say,  the  difference  in  the  degree 
of  civilization  between  one  country  and  another  is  the  difference 
between  success  and  failure  in  the  sale  of  luxuries  to  which  the 
people  of  highly  civilized  countries  have  been  accustomed. 

The  prosperity  of  a  country  depends  upon  the  stability  of  the 
government  as  well  as  upon  its  natural  wealth.  No  matter  how 
rich  in  minerals  or  agriculture  a  country  may  be,  it  can  never 
enjoy  the  fruits  of  its  wealth  while  those  in  power  govern  un- 
wisely and  inefficiently.  The  government  must  be  stable.  Wit- 
ness the  case  of  Russia  rquresenting  an  inefficient  and  unwise 
government,  and  Btexico  impoverished  by  almost  perpetual  revo- 
lution. The  study  of  political  conditions  should  be  just  as  im- 
portant to  the  manufacturer  as  the  study  of  commercial  and 
industrial  conditions. 

In  normal  times  steamers  follow  their  schedules  almost  as 
precisely  as  railroad  tnuns  of  highly  developed  transportation 
.   systems.    The  world's  greatest  ports  are  well  equipped  with 
modem  facilities  for  the  quick  loading  and  unloading  of  cargoes. 

3.  "Than  k  pnhMf  no  coimUy  in  Um  vorld  whui.  pinot  are  more  tued, 
itt  proportion  to  population,  and  are  considered  nore  necessary  as  features  of  home 
life  than  in  Australia,  The  local  piano  trade  seems  to  follow  closely  the  local  mar- 
riage statistics,  a  piano  being  considered  almost  ifiie  first  essential  of  domestic  life, 
so  that  it  becomes  the  usual  circumstance  for  a  newly  married  couple  to  buy  a 
piano,  Uw  «nr  tfaao  pojnenti  preyonting  wnj  Snandil  horUiip  in  so  doinff.  No 
natter  horn  Iramble  the  boni^  nor  how  remote  it  may  be  from  large  cities,  a  piano 
it  usuallr  •  Mtaf  fmtmm  «f  il;''-<Mlr  Cwiiitor  tad  TMde  Bf^orti^  Febrmry 
1^  1911. 


le  EXPORTING  TO  THE  WORLD 


These  ports  are  readied  by  the  kading  ocean  hi^^ways  and 
commerce  is  conducted  with  very  little  delay.  Such  ideal  con- 
ditions do  not  prevail  all  over  the  world,  however,  and  the 

manufacturer  must  take  into  consideration  the  location  of  ports 
that  he  wishes  to  ship  goods  to  with  respect  to  their  proximity 
to  the  principal  ocean  trade  routes. 

Kmd  of  PofuleHm 
DeUrtrnmng  Factor 

The  manufacturer  should  not  be  misled  into  the  belief  that 
the  success  of  his  foreign  trade  depends  on  population  figures — 
that  greater  the  population,  greater  the  volume  of  his  business. 
The  tevd^waded  business  man  wants  to  know  more  than  the 
total  population  of  a  given  country  or  continent  The  fact  that 
China  has  a  population  of  over  336,000,000  means  nothing  to 
him  unless  these  figures  are  accompanied  by  data  giving  an  idea 
of  the  class  of  people  that  make  up  this  population.  Neither 
will  the  statement  that  British  India  has  a  population  of  over 
300,000,000  peoi^e  give  the  manufacturer  an  idea  of  the  pur- 
chash^  power  of  the  inhabitants.  According  to  the  Statesman's 
Yearbook  for  1912  the  population  of  Bolivia  was  2,521,000, 
while  its  purchasing  population  was  214,000.  The  population 
of  Cuba  in  the  same  year  was  2,474,000,  while  its  purchasing 
population  was  1,026,000.  This  indicates  that  total  population 
must  not  always  be  f<died  on  as  an  essential  factor  that  deter- 
mines the  potential  baying  power  of  a  maricet 


Chapter  III 


METHODS  OF  EXPORTING 
Sblung  methods  invcmlved  in:  exporting  DiREcr— Using 

TRAVBUNG  MEN  TO  DEVELOP  tSADE— DEVELOPING  TRADE  BY  OOR- 

RBSPQNDENCB — ^ADVERTISING  AS  A  MEANS  OF  MIVELOPING  BUSI-- 

NESS— The  export  commission  house  as  an  exporter — The 

EXPORT  MERCHANT 

There  are  two  essential  methods  of  exporting.  They  are  as 
follows : 

Direct  exporting,  or  indirect  exporting. 
The  manufacturer  must  choose  between  these  two  methods 
before  beginning  business.  Then,  after  settling  this  phase  of 
the  problem,  he  must  again  attadc  it  from  a  new  angle  If  he 
decides  to  do  exporting  direct  he  must  dedde  on  a  definite  policy 
in  connection  with  this  plan.  If  he  decides  to  do  exporting  by 
the  indirect  method,  then  his  worries  will  be  practically  over. 
Ordmarily,  the  difference  between  direct  exporting  and  indirect 
exporting  is  the  difference  between  being  an  exporter  or  not 
being  an  exporter. 

Selling  Methods  Involved 
in  Exporting  Dvrett 

The  manufacturer  choosing  to  sell  direct  to  foreign  customers 
becomes  a  full-fledged  exporter  in  the  real  sense  of  the  word. 
He  has  decided  to  exploit  his  own  markets,  to  choose  his  own 

methods  of  developing  business,  and  to  shoulder  the  entire  respon- 
sibility. He  has  a  hundred  and  one  problems  to  solve,  the  most 
important  one  being  the  method  of  developing  tbe  fordgn 
market  Each  method  may  dqpend  on  the  character  of  his 
products,  the  amount  of  capital  he  has  at  his  disposal,  or  the 
specific  maricet  he  desires  to  exploit.  The  essential  methods  of 
selling  direct  are  as  follows: 

Through  traveling  salesmen. 

Through  correspondence. 

Through  advertising. 

17 


18  EXPORTING  TO  THE  WORLD 


Through  foreign  branches. 
Through  foreign  agencies. 

Using  Traveling  Men  to 
Develop  Export  Trade 

The  manufacturer  who  can  afford  to  send  a  traveling  salesman 
to  lucrative  markets  after  he  has  carefully  investigated  their  pos- 
sibilities for  development  is  certainly  selecting  the  ideal  way  of 
^i^\Mng  business.   The  personal  element  is  [ust  as  important  * 
a  factor  in  the  foreign  fidd  as  it  is  at  home.  The  travduig  sales- 
man supplies  that  element.    Experience  will  dictate  to  what 
countries  the  traveling  salesman  should  be  sent.  It  is  possible  that 
the  salesman  will  be  confined  to  a  limited  market  where  the 
results  obtainable  will  justify  the  expenditure  of  money  on  per- 
sonal representation.   No  manufacturer  or  txporttr  has  been 
known  to  send  travehi^  salesmen  to  every  portion  of  the  globe. 
In  the  first  place  it  is  needless,  and  in  the  second  place,  it  is  too 
expensive.   The  most  careful  manufacturers  and  exporters  first 
study  their  field,  and  then  decide  what  markets  shall  be  exploited 
by  traveling  salesmen  and  what  markets  shall  be  exploited  by 
other  methods. 

Developing  Export  Trade 
by  Correspondence 

Export  business  can  be  developed  through  correspondence. 
This  is,  indeed,  an  economical  way  of  launching  into  foreign 
trade,  but  at  the  same  time  it  requires  a  technique  in  the  handling 
of  foreign  correspondence  that  very  few  American  manufac- 
turers can  boast  of.  It  requires  tact  It  requires  diplomacy  in 
letter  writing.    It  is  much  more  difficult  to  write  a  letter  to  a 
person  one  does  not  know  than  to  a  personal  friend.   The  manu- 
facturer must  imderstand  the  preparation  of  correspondence 
material  that  will  not  only  interest  the  foreign  purchaser  who 
may  be  thousand  of  mileff  away,  but  will  draw  an  inquiry  as  wdL 
and  later,  perhaps,  turn  that  inquiry  into  an  order.  Considerable 
export  business  has  been  developed  in  this  country  by  the  corre- 
spondence method,  but  only  through  the  intelligent  and  skillful 
way  in  which  the  successful  manufacturer  employed  it 

Advertising  as  a  Means 
of  Developing  Business 

Advertising  is  an  important  dement  in  the  development  of  an 


METHODS  OF  EXPORTING  19 


export  business  in  whatever  direct  method  the  manufacturer  has 
decided  to  follow.  If  the  manufacturer  decides  to  send  a  sales- 
man to  foreign  countries  he  must  do  a  certain  amount  of  adver- 
tising. If  he  decides  to  obtain  foreign  customers  through  corre- 
spondence only,  advertising  must  be  empl<^ed.  If  he  decides 
to  develop  his  export  trade  by  using  foreign  agents,  he  must 
consider  advertising.  If  he  feels  that  he  can  afford  the  estab- 
lishment of  a  foreign  branch,  he  must  do  advertising  to  exploit 
the  held.  Advertising  involves  the  study  of  foreign  media,  of 
local  media  ^t  circulates  in  foreign  countries,  the  psychology 
of  the  people  in  the  country  where  he  wishes  to  sell  his  mer- 
chandise, their  habits,  customs  and  the  degree  of  their  civilization. 
It  also  involves  the  study  of  American  foreign  trade  journals  that 
circulate  in  foreign  countries. 

Foreign  Branches  or 
Means  of  Developing  Trade 

Provided  the  volume  of  business  warrants  it,  the  establishment 
of  a  foreign  branch  is  a  splendid  effort  toward  developing  a 
foreign  trade.  Some  of  our  successful  export  manufacturers 
are  enjoying  a  lucrative  business  as  the  result  of  business  fore- 
sight in  the  establishment  of  foreign  branches.  The  fordgn 
branch  affords  the  manufacturer  the  advantage  of  keeping  in 
close  touch  with  the  market.  Warehouses  may  be  conducted  in 
connection  with  the  foreign  branch.  In  these  warehouses  may  be 
kept  large  quantities  of  goods  in  order  that  prompt  deliveries  to 
customers  may  be  effected.  The  branches  may  also  include  show 
and  sample  rooms  where  customers  may  visit  them  to  inspect  the 
merchandise  they  wish  to  have  sent  to  their  business  houses. 
This  relieves  them  of  the  necessity  of  making  long  journeys  to 
the  United  States  for  this  purpose.  Again,  the  manufacturer 
with  a  foreign  branch  is  independent  of  selling  agents  and  mer- 
chant houses  alike.  His  credit  problems  are  reduced  to  a  mini- 
mum as  he  is  on  the  ground  to  investigate  the  customer's  capa- 
bilities of  meeting  his  obligations. 

The  Foreign  Agent  as 
Export  Trade  Developer 

Hundreds  of  oomnusnon  agents  liidng  in  overseas  ports  de- 
pend for  their  bread  and  butter  oa  their  sale  of  foreign-made 


EXPORTING  TO  THE  WORLD 


articles  to  which  they  have  been  entrusted  by  manufacturers. 
American  coounissiofi  houses  liave  for  many  years  recognized  the 
importance  of  tiiese  foraga  agents  in  the  handling  of  their  busi- 
ness abroad.    American  manufacturers,  qnidc  to  grasp  the  ad- 
vantages offered,  are  now  making  suitable  connections  with 
these  representatives.   Often  these  commission  agents  are  mem- 
bers of  dd  establidied  instittttions  that  not  only  command  a  large 
business  in  their  own  districts  but  the  business  of  rich  sections 
of  the  country  by  means  of  distributing  centers  as  well.  The 
manufacturer,  however,  must  be  careful  of  the  foreign  agency 
with  whom  he  establishes  connections.   Sometimes  these  houses 
are  not  what  their  letterheads  indicate.    Their  credit  standing 
may  be  shaky.   In  this  day  of  qiecialized  e£Fort  however,  it  is 
not  difficult  to  obtain  rdiadUe  credit  information  on  merchants 
in  foreign  countries.    The  manufacturer  must  also  know  the 
lines  his  agent  handles.    If  the  market  is  highly  developed  the 
foreign  agent  may  confine  himself  to  allied  lines,  such  as  office 
equipment  or  typewriters,  while  in  the  lesser  developed 
marfeets  ht  may  deal  in  articles  ranging  from  needles  to  pianos. 
It  is,  therefore,  essential  that  the  manufacturer  inform  himself 
on  the  extent  to  which  the  market  has  been  developed,  as  well 
as  on  the  character  of  the  goods  his  foreign  agent  has  for  sale. 
In  making  proper  connections  with  a  foreign  agent  the  manu- 
facturer will  enjoy  the  advantage  of  being  represented  in  the 
local  fidd  by  a  well  established  organization  whose  standing  in 
^e  community  may  be  a  distinct  asset  The  manufacturer  must 
also  take  into  consideration  the  element  of  person^  influence  on 
actual  buyers,  which,  after  all  is  said,  is  the  most  powerful  forci 
to  be  considered  in  selling  effort.  There  are  also  the  advantages 
of  carrying  only  one  foreign  account  in  the  domestic  books,  o| 
worrying  over  <»ily  one  credit  risk»  and  of  the  assurance,  per- 
haps, of  a  certain  volume  of  busmess. 

Selling  Methods  Involved 
in  Indirect  Exporting 

The  direct  method  of  exporting  involves  the  establishment  of 
an  export  department  as  well  as  the  creation  of  some  sort  of 
selling  policy.  It  involves  the  handling  of  all  the  details  peculiar 
to  the  shipment  of  goods  overseas  as  well  as  the  assuming  of 
the  risks  in  connection  widi  the  granting  of  credit  to  foreign 
purchasers.    Perhaps  the  manufacturer  is  not  in  a  position  to 


METHODS  OF  EXPORTING 


21 


assume  all  these  duties  and  yet  desires  to  sell  his  merchandise 
in  foreign  countries.  Perhaps  he  is  not  capable  of  financing  his 
overseas  sales.  In  such  a  case  what  can  he  do?  He  may  turn 
over  his  business  to  a  middle  man.   There  are  many  kinds  of 

middle  men.  The  following  constitute  the  essential  agencies 
through  which  a  manufacturer  may  do  business  in  foreign 
countries: 

The  export  commission  house. 

The  export  merchant. 

The  manufacturer's  export  agent 

The  export  forwarder. 

The  Export  Commission 

House  as  an  Exporter 

The  export  cpmmission  house  is  a  very  old  institution  in  for- 
eign commerce.  In  England  the  operator  of  an  export  commis- 
sion house  is  called  an  indent  merchant  The  indent  represents 
the  order  the  commission  house  receives  from  a  foreign  client. 
The  export  commission  house  may  be  found  in  all  the  principal 
American  ports.  The  functions  of  an  export  commission  house, 
theoretically,  are  ^  to  sell  American  merchanctise  in  foreign 
countries,  but  rather  to  act  purely  as  a  purchaser  of  American 
commodities  for  foreign  buyers.  The  early  history  of  these  ex- 
port commission  houses  shows  that  it  was  not  their  practice  to 
charge  the  manufacturer  a  commission  for  the  work  it  was  en- 
gaged in  performing  for  the  foreign  buyer.  In  late  years,  how- 
ever, the  commissicipi  houses  have  been  known  to  be  making 
charges  to  the  manufacturers  as  well  as  obtaining  a  commission 
from  their  foreign  clients.  It  is  argued  by  the  commission  houses 
that  the  small  commission  charged  to  their  foreign  clientele — fixed 
by  custom— is  so  small  that  it  is  impossible  to  obtain  reasonable 
returns  in  this  present  day  of  the  high  cost  of  doing  business. 
Neither  is  it  the  function  of  the  export  commission  house  to 
cxi^t  the  foreign  fieW  for  the  manufacturer.  It  represents  the 
buyer,  not  the  seller.  It  will  buy  goods  only  on  the  best  terms 
obtainable,  and  only  when  it  has  actual  orders  irom  the  foreign 
buyer  to  execute.  On  the  other  hand,  the  manufacturer  is  en- 
tirely relieved  from  such  details  as  the  shipment  of  goods  and 
the  collection  of  his  miHiey.  The  commission  house  finances  its 
own  shipments.    Ordinarily,  the  manufacturer  is  paid  for  his 


%2 


EXPORTING  TO  THE  WORLD 


mctchandisc  <m  the  usual  domestic  trade  terms.  Within  recent 
years,  however,  the  export  commisaon  house  has  heen  extcndiiig 
its  activities  to  such  an  extent  that  its  origiiial  functioil  has  been 
practically  lost  sight  of. 

The  Expori  Merchant  oi 
Seller  of  American  Wares 

Another  intermediary  is  the  export  merchant.  His  functions  of 
late  have  become  so  closely  intenmngled  with  those  of  the  export 
commission  house  that  it  is  difficult  to  make  a  distinction-  The 
export  merchant  m  theory  does  not  buy  or  sell  on  oommissioil. 
He  purchases  outright  and  sells  outright  for  profit  or  loss.  He 
has  estaWished  branches  in  certain  markets.  Sometimes  he 
operates  retail  stores  in  coonectiQii  with  these  branches.  The 
manufacturer,  as  in  the  case  of  the  export  commission  house, 
originally  could  expect  any  special  selling  effort  or  service  from 
the  export  merchant. 

The  Manufacturer's  Export 
Ageni  as  an  InUrmedimy 

As  a  comparatiYety  recent  product  in  the  United  States  the 
manufacturer's  export  agent  may  appeal  to  the  manufacturer. 
It  is  the  manufacturer's  export  agent's  duty  to  exf^t  the  for- 
eign market  for  his  client's  goods.    That  is  his  busmcss.  He 
also  relieves  the  manufacturer  of  all  details  pertaining  to  ship- 
jMng  for  export  or  financing  the  shipment  of  goods  abroad.  As 
the  functions  of  these  manufacturer's  export  agents  differ  it  is 
necessary  that  the  manufacturer  make  a  dose  study  of  the  advan- 
tages offered  Ijy  the  various  representatives  before  making  a 
permanent  connection.    Some  of  them  charge  commissions  for 
their  work,  while  others  demand  regular  monthly  payments.  Still 
others  have  a  fixed  saku^  and  an  expense  account  which  is  pro- 
vided for  by  the  various  manufacturers  interested  on  a  pro  rata 
basis.  Some  confine  themsdves  to  allied  lines,  while  others  en- 
gage in  obtaining  representatkm  for  any  line  that  is  of  ment, 
regardless  of  its  character. 

The  Export  Forwarder 
as  a  Middle  Man 


The  tsq^Tt  freight  forwarder  is  not  a  sdling  agent  His 


METHODS  OF  EXPORTING 


28 


functions  are  to  ship  goods  to  their  destination,  thereby  relieving 
the  client  of  all  the  details  peculiar  to  such  activity.  He  ships 
goods  to  any  part  of  the  world  in  any  quantity.  He  attends  to 
all  shipping  documents,  places  the  goods  on  board  the  steamer, 
and  delivers  to  the  foreign  purchaser.  Sometimes  he  executes 
orders  in  foreign  countries,  but  this  is  not  a  part  of  his  regular 
functions. 

Other  Indirect  Selling 
Methods  Open  to  Exporter 

The  allied  company  and  the  selling  company  serve  as  t3rpes  of 
other  organizations  that  the  manufacturer  may  find  profitable  to 
join.  The  allied  company  takes  over  the  firm's  name  for  a  def- 
inite territory.  It  may  involve  patent  rights  in  foreign  countries. 
The  allied  company  may  be  under  the  management  of  men  finan- 
dally  interested  in  the  export  manufacturer's  business  or  under 
the  management  of  outsiders.  The  allied  company's  methods 
may  involve  financial  responsibility  to  a  certain  extent  in  the  in- 
dustries of  those  manufacturers  whose  products  are  represented. 
The  allied  company  may  even  manufacture  abroad. 

The  selling  company  differs  from  the  allied  company  in  that 
it  confines  its  activities  purely  to  selling.  The  •chief  service  that 
the  selling  company  renders  is  the  more  rapid  development  of 
foreign  markets. 

As  the  export  trade  of  the  United  States  is  rapidly  growing, 
hundreds  of  new  organizati^ms  are  being  fcmned  to  partidpate 
in  this  wave  of  prosperity.  As  these  new  companies  spring  up 
they  offer  the  manufacturer  new  inducements  of  one  kind  or 
another.  Some  are  good  and  some  are  bad.  The  manufacturer 
is  cautioned  to  watch  his  step  in  conferring  with  these  budding 
organizations  before  making  any  permanent  agreement  to  enter 
foreign  trade. 


Chaphk  IV 


ORGANIZATION  OF  EXPORT  DEPARTMENT 

£jCP<XtT  DBPAKTMENT  NEED  NOT  BE  AN   BxnSNSIVE  AFFAIR— 

Selecting  an  export  if  ANA<m  fi»  the  business— Someone 

IN  AUTHORITY  AS  EXECUTIVE  HEAI>— WhERE  IS  EXPORT  DEPART- 
ment to  be  estabushed? — essential  units  in  export 

Department 

When  the  manufacturer  resohres  to  enter  export  trade  it  is 
taken  for  granted  that  he  is  prefwired  to  assume  all  the  iHirdens 

peculiar  to  shipping  and  selling  to  foreign  customers.  The  mat- 
ter of  establishing  an  export  department  rests  now  on  his  own 
filioulders^  He  must  e3q>loit  his  own  market,  maintain  his  own 
sales  force,  conduct  his  own  advertising  proi»ganda,  make  hb 
own  market  surveys,  investigate  the  credit  standing  of  his  pros- 
pective customers,  make  his  own  collections,  and  assume  a  mul- 
titude of  other  small  burdens  in  connection  with  the  export  busi- 
ness. However,  as  a  direct  exporter  he  has  the  advantage  of 
handling  his  own  goods,  and  of  cutting  out  the  nuddle  man's 
profit.  He  comes  in  contact  with  the  market  personally.  He 
builds  up  his  own  business.  The  middle  man  does  not  do  this 
for  as  a  rule.  As  a  direct  exporter  he  has  that  personal 
interest  and  enthnnasm  in  the  success  of  his  pel  products  that 
no  commission  man  or  export  manager  may  have.  This  is  the 
element  that  is  inspiring  many  manufacturers  to  organize  thdr 
own  export  departments  and  sell  direct  to  foreign  customers. 

Export  Deparimeni  Need 

Not  Be  Expensive  A§m 

The  organization  of  an  export  department  need  not  involve 
liie  expenditure  of  a  considerable  sum  of  money  in  the  beginning, 
unless,  of  cot  irse,  a  manufacturer's  business  is  so  extensive  that 
additional  capital  is  accesmble  f or  ^  estal)]i8hment  of  a  Aor- 
oughly  equipped  division  whose  chief  functions  shall  comust  of 

8i 


ORGANIZATION  OF  EXPORT  DEPARTMENT  25 


the  management  of  the  foreign  business  of  the  company  in  all 
of  its  details.  But  for  the  small  manufacturer — the  man  of 
moderate  means — who  desires  to  adopt  a  sound  pay-as-you-go 
policy  of  develoimig  the  foreign  markets,  the  logical  course  to 
follow  would  be  to  absorb  the  additknial  duties  required  in 
exporting  in  his  existing  organization,  with  an  export  manager 
in  charge  who  shall  devote  his  entire  time  to  the  details.  Even 
then  there  should  be  close  supervision  by  someone  interested  in 
the  business  or  by  some  trustworthy  employe  so  that  all  prob- 
lems arising  from  time  to  time  may  be  settled  with  some  degree 
of  intelligence.  Export  trade  is,  indeed,  interesting.  The  person 
in  charge  deals  with  all  manner  of  people,  who  follow  different 
methods  of  livings  and  of  thinking  and  of  speech.  Today  he  may 
be  communicating  witii  a  customer  in  Egypt  and  tomorrow  with 
a  customer  in  Siberia.  His  desk  is  the  hub  of  a  wheel  whose 
spokes  reach  out  in  all  directions.  The  export  head  of  the  busi- 
ness is  truty  a  man  of  the  world.  He  becomes  broadened  and 
he  can  look  at  tilings  from  the  other  feUow's  viewpoint  The 
establishment  of  an  export  department  need  not  involve  extra 
buildings,  or  special  departments.  It  can  fit  right  into  the  routine 
of  the  domestic  business — and  succeed. 

Selecting  an  Export 
Manager  for  the  Business 

Although  the  fiekl  is  quite  full  of  applicants  for  the  positicm 
of  export  manager,  the  manufacturer  will  find  not  a  little  diffi- 
culty in  obtaining  a  competent  person  to  fill  the  bill.  In  New 
York  City  alone  there  are  hundreds  of  young  men  whose  only 
daim  to  consideration  rests  in  their  alMlity  to  speak  and  wr^ 
in  a  foreign  language.  This  is  not  enough.  A  successful  export 
manager  should  be  more  than  a  linguist.  He  should  be  a  student 
of  countries,  market  ccmditions,  political  developments  in  foreign 
countries,  and,  above  all,  a  coomiercial  dipkmiat  Mmover,  he 
should  be  a  gentleman  in  every  respect,  as  he  will  come  in  con- 
tact with  buyers  from  foreign  lands  whose  degree  of  culture  and 
learning  may  be  surprising  to  the  provincial  American  business 
man*  As  an  export  manager  is  expected  to  transact  a  large 
volume  of  business  through  comspoodeace  with  customers  he 
does  not  know  it  b  of  prime  inqiortanoe  tiiat  he  be  particdariy 


26 


EXPORTING  TO  THE  WORLD 


skinful  in  dictating  letters  and  in  avoiding  certain  expressions 
iti  his  correspondence  so  aMmnon  to  the  American  buwness 
man  of  average  intelligence.  For  the  young  man  who  is  sedong 
a  career  which  may  grow  with  America's  export  trade  here  is 
an  opportunity  that  should  exercise  his  initiative  and  enterprise 
to  the  fullest  extent,  and  consequently  bring  adequate  financial 
returns. 

Who  Is  Capable  of  FUling 

Export  Managers  Shoes f 

Perhaps  the  manufacturer's  first  thought  in  looking  around  for 
an  export  manager  will  be  to  advertise  in  the  newspapers.  His 
mormng  mail  will  probably  consist  of  applications  from  export 
managers  already  connected  with  other  firms,  or  from  persons 
claiming  to  know  foreign  countries  and  one  or  two  foreign  lan- 
guages. Perhaps  the  mail  may  bring  in  the  applications  of  young 
men  who  have  just  completed  a  course  m  Foreign  Trade  m  some 
school  or  college.  The  colleges  and  universities  of  the  country  are 
now  paying  particular  attention  to  the  teaching  of  subjects  aimed 
to  fit  young  men  for  foreign  trade  service.  These  institutions  are 
doing  a  worthy  work  and  place  at  the  disposal  of  the  student 
valuaUe  hif ormation  that  is  essential  m  fordgn  trade.  A  domesUc 
sales  manager,  also,  may  present  his  ^plication  along  witfi  a 
record  of  his  sales  efforts  at  home.  His  own  sales  manager  may 
be  a  contender  for  the  position. 

Of  all  these  candidates  the  most  promising  is  the  export  man- 
ager from  another  firm.  The  manufacturer  who  is  able  to  obtain 
the  services  of  an  export  jnanager  who  is  thoroughly  experienced 
m  the  business  is,  indeed,  fortunate,  as  their  number  is  hmited. 
The  export  manager  not  only  introduces  an  export  syston  into 
the  manufacturer's  organization,  who  may  bring  along  with  him 
an  invaluaWe  experience  which  years  of  hard  labor  has  accu- 
mulated. 

The  sales  manager  is  a  Ukdiy  candidate.  The  man  who  is 
ahie  to  sell  goods  m  the  domestic  fidd,  and  who  has  had  txpcnr 

cnce  in  directing  salesmen  and  selling  campaigns  !^iould  make 
an  efficient  export  manager.  Possessing  this  knowledge  of  do- 
ing busmess  at  home,  it  is  only  a  question  of  time  when  he  can 
master  the  "shmt"  of  export  trade.  If  the  manufacturer  can 
afford  to  take  his  own  sales  manager  from  his  domestic  bath 
by  all  means  he  should  give  htm  the  opportunity  of  c<mdiicthig 


ORGANIZATION  OF  EXPORT  DEPARTMENT  27 


his  export  department.   By  followmg  this  course  he  need  not 

go  out  of  his  own  organization  in  search  of  an  export  manager. 
Instead,  he  will  be  throwing  the  responsibilities  on  the  shoulders 
of  one  who  is  ahready  acquainted  with  his  products  and  organiza- 
tion* 

There  may  he  in  the  organization  a  young  man  who  displays 
considerable  alulity  for  organization  and  the  handling  of  detaik, 

and  who  has  indicated  a  willingness  to  grasp  the  principles  and 
technique  of  export  trade.  Under  careful  direction  and  training 
a  young  man  possessing  these  qualifications  should  soon  be  able 
to  take  complete  control  of  the  ejqK>rt  business  of  the  concern. 

Someone  tfi  Authority 

as  Executive  Head 

No  matter  who  the  manufacturer  selects  to  conduct  his  export 
department  there  should  always  be  someone  in  authority — ^some- 
one financially  interested  in  the  concern — who  should  serve  in 
the  capacity  of  court  of  last  resort  in  matters  demanding  execu- 
tive decision.  From  time  to  time  the  export  manager  will  submit 
propositions  and  suggestions  concerning  the  development  of  the 
business  overseas.  The  export  manager  should  not  decide  these 
things  alone.  He  should  merely  submit  hi^  recommendations.  The 
executive  in  charge  should  also  be  responsible  for  the  amount  of 
experimentation  in  a  foreign  market  He  should  determine  whether 
a  change  in  the  product  is  justified  by  the  returns  promised.  He 
should  serve  as  the  fimal  judge  in  matters  involving  credit  prob- 
lems. The  determining  of  a  market  policy  which  involves  the 
use  of  salesmen  exclusively  or  ccMrrespondence  and  advertising 
exdosively,  the  establishment  of  branches  or  the  appointment  of 
foreign  agents  arc  other  matters  that  demand  executive  atten- 
tion should  rest  with  the  executive  in  charge.  Is  the  manufac- 
turer going  to  sell  direct  to  wholesalers  or  to  retailers  or  to  con- 
sumers?  This  is  a  question  that  the  executive  must  answer. 

Where  Is  Export  Departmeni 
to  Be  EstablishedP 

Let  us  suppose  the  manufacturer  has  selected  his  export  man- 
ager. The  next  question  is,  "Where  shall  I  establish  my  export 
department  ?"  He  must  decide  between  the  factory  and  the  prin- 
cipal port  If  he  establishes  his  eaqxMt  dqiartment  at  the  factoty 


IB  EXPORTING  TO  THE  WORLD 


he  will  be  giving  his  expcnt  manager  the  advantage  of  dose 
contact  with  the  business,  and  an  opportunity  of  not  only  direct- 
ing the  invoicing  of  the  goods  and  their  proper  packing,  but  of 
offering  practical  suggestions  in  the  method  of  productioa  that 
the  peculiarities  of  the  different  markets  demand.  When  certain 
ditficulties  relative  to  shipping  instructions  arise  the  export  man- 
ager is  on  the  ground  to  clear  them  away. 

On  the  fyther  hand,  if  the  manufacturer  wishes  to  establish  a 
separate  export  department  at  the  principal  port  he  will  be  gii^ng 
his  export  manager  the  advantage  of  being  in  close  touch  with 
the  buyers  who  are  constantly  visiting  this  country,  and  with 
shipping  conditicms,  so  that  he  may  be  able  to  direct  his  own 
shipments  without  employing  a  foreign  freight  forwarder  or 
some  other  intermediary.  Established  at  the  principal  port,  the 
export  manager  also  has  the  advantage  of  keeping  his  fingers  on 
the  pulse  of  export  trade.  He  meets  with  other  members  of  his 
fraternity  of  business  with  whom  he  may  be  able  to  exchange 
views.  The  buyers  of  hundreds  of  commissacm  houses  are  sta- 
tioned at  the  principal  port.  It  is  to  the  advantage  of  the  export 
manager  to  keep  in  close  touch  with  these  representatives.  It 
is  possible,  also»  that  he  may  be  able  to  finance  drafts  on  foreign 
buyers  much  more  economically  than  it  is  possible  at  some  inte- 
rior point  where  the  facilities  of  financing  foreign  trade  sh^ 
ments  are  inadequate. 

Export  Department  Should 
B€  WeU  Equipped 

Wherever  the  export  dq[)artment  is  established  it  should  be 
the  aim  of  the  manufacturer  to  equip  it  with  a  library  that 

should  contain  all  available  literature  on  the  subject  of  exporting, 
together  with  accurate  atlases  and  official  data.  This  will  add 
to  the  efficiency  of  the  export  manager.  The  manufacturer 
should  subscribe  to  all  the  leading  export  magazines,  as  wdl 
as  to  the  pablicatioiis  of  the  United  States  Bureau  of  Foreign 
and  Domestic  Conunerce  which  deal  exclusively  in  foreign  trade 
matters.  The  reports  of  the  conventions  of  the  National  Foreign 
'Trade  Council  and  of  the  American  Manufacturers*  Export 
Association  are  also  valuable.  The  Philadelphia  Commercial 
Museum  is  splendidly  equipped  to  offer  valuable  information  on 
all  matters  pertaining  to  export  trad^  as  are  also  a  large  nmnber 


ORGANIZATION  OF  EXPORT  DEPARTMENT  29 


of  Chambers  of  Commerce  in  other  cities.  The  Pan-American 
Union  is  not  used  enough  by  American  manufacturers  seeking 
information  in  connection  with  trade  problems  with  Latin-Amer- 
ica.  The  Pan-American  Union,  located  in  Washington,  D.  C, 

is  supported  by  twenty-one  republics  of  the  western  hemisphere, 
and  its  functions  are  to  bring  about  closer  political  and  commer- 
cial relations  between  the  countries  involved  in  the  organization. 

Essential  Units  in 

Export  Departtnent 

We  know  now  that  there  must  be  an  executive  in  charge  of 
the  export  department  aside  from  the  export  manager.  We 
know  that  the  export  manager  is  in  charge  of  the  details  peculiar 

10  exporting  and  is  responsible  for  his  acts  to  the  executive,  who 
may  be  the  manufacturer  himself  or  someone  financially  inter- 
ested in  the  concern.  But  the  export  manager  must  have  assist- 
ants. If  the  business  does  not  justify  a  distinct  perstnmel  from 
that  akeady  employed  in  the  dbmestic  fidd  then  it  is  simply  a 
matter  of  adjusting  the  new  duties  to  the  employes  who  conduct 
the  domestic  business. 

However,  if  the  manufacturer  is  determined  to  equip  his  export 
department  with  an  entirely  new  force  be  will  learn  he  has  quite 
a  job  on  his  hands.  In  the  language  of  Mr.  D.  £.  Delgado, 
export  manager  of  the  Eastman  Kodak  G>mpany,  who  gave 
an  address  on  "Export  Teclfnique"  before  the  Sixth  National 
Foreign  Trade  Convention  in  Chicago,  "the  greatest  trouble 
manufacturers  have  in  developing  foreign  trade  is  lack  of  conv^ 
petent  and  plentiful  help  with  export  knowledge  of  languages 
and  details,  and  time  and  again  business  has  been  lost  because 
of  continued  petty  annoyances  caused  by  inexperience  or  badly 
informed  correspondents." 

Mr.  Delgado  continues:  "After  long  experience  in  the  ex- 
port business  with  an  organization  which  is  supplied  with 
means  sufficient  to  obtain  that  which  is  most  desirable,  it  is 
my  opinion  that  a  party  going  into  the  export  trade  should 
b^n  by  selecting  a  man  to  look  after  the  development  of 
business ;  one  who  has  traveled,  is  thoroughly  posted  on  export 
dealings  and,  if  possible,  one  who  has  a  knowledge  of  foreign 
languag-es.  He  should  receive  all  incoming  mail  and  read  all 
outgoing  mail  signed  by  the  correspondents  and,  in  turn,  he 
should  divide  the  detail  work  and  correspondence  by  terri- 


30 


EXPORTING  TO  THE  WORLD 


tories  between  the  other  men  who  would  be  niade  responsible 
to  him  for  the  success  of  the  sales  and  connections  in  their 
territories.  The  export  manager  must  arrange  the  detail  work 
in  such  manner  that  he  may  be  able  to  make  various  trips, 
say,  one  every  year,  until  he  has  visited  all  the  countries  with 
which  he  is  doing  business,  and  do  the  missionary  work 
necessary  in  new  territories  so  he  may  know  where  to  send 
his  salesmen  and  what  to  expect  from  them  under  the  condi- 
tions.  It  frequently  happens  that  a  class  of  merchandise  will 
find  ready  sale  with  comparatively  easy  work  for  a  salesman 
in  one  territory,  while  a  man  working  a  great  deal  harder  may 
not  obtain  as  many  orders  in  a  territory  dose  by,  and  the  ex- 
port manager  should  be  sufficiently  posted  to  properly  judge 
the  ability  of  his  men,  which  he  cannot  do  unless  he  visits  the 
territory  and  becomes  <aware  of  conditions,  such  as  competi- 
tion, purchasing  power  of  the  inhabitants,  etc.   These  men 
should  be  sent  out  yearly  to  cover  all  or  part  of  the  territory 
and  return  to  the  office  to  handle  correspondence,  etc.,  and 
keep  in  touch  with  it.   Of  such  men  would  be  required,  first, 
experience  in  the  shif^nng  business;  second,  knowledge  of 
some  of  the  lai^^uages  of  the  territory  which  he  is  to  direct; 
third,  traveling  experience;  fourth,  a  man  who  can  code  a 
cable  efficiently  and  economically  and  who  will  not  hesitate  to 
use  cables  when  necessary;  competent  to  correspond  in  the 
customers'  lai^^uages,  or  at  least  capable  of  writing,  in  addition 
to  English,  French  and  Spanish;  the  advantage  of  the  man 
who  controls  French  and  Spanish  being  that  he  could  write 
French  and  English  to  the  Mediterranean  and  European  coun- 
tries and  French  and  Spanish  to  Asiatic  and  Latin-American 
countries.   Further,  such  man  should,  as  soon  as  he  is  ac- 
quainted in  a  general  way  with  the  line  of  goods  of  the  manu- 
facturer, be  sent  to  sell  goods  in  the  territory,  for  the  purpose, 
not  merely  to  sell  merchandise,  but  to  get  acquainted  with  the 
customers  and  conditions  in  the  various  countries  with  which 
he  will  do  business.  When  this  man  returns  to  the  office,  he 
will  be  able  to  produce  far  better  results,  far  in  excess  of  what 
could  be  accomplished  by  many  years  of  continued  corre- 
i|K>ndence  without  personal  acquaintance,  and  will  be  fitted 
to  maintain  friendly  business  intmoorse.  The  first  two  men- 
tioned conditions  would  be  sufficient  if  the  man  is  citable. 


ORGANIZATION  OF  EXPORT  DEPARTMENT  81 


Export  Manager  Should 
Control  Export  Credits 

"The  manager  of  the  export  department  should  also  have 

control  of  export  credits,  or  the  credit  manager  should  comply 
with  the  arrangements  made  by  the  export  man,  for  the  reason 
that  it  frequently  occurs  that  perfectly  responsible  foreign 
firms  ask  for  extension  of  time  on  drafts,  not  due  to  their  in- 
ability to  pay,  but  the  exchange  market  may  have  changed 
violently  for  various  reasons  and  by  waiting  a  few  days  or 
weeks  the  drafts  could  be  met  with  considerable  saving  to  the 
foreign  buyer.  The  export  man,  not  being  busy  with  the 
details,  can.keep  in  constant  touch  with  the  fluctuation  of  for- 
eign exchange,  political  and  mercantile  conditions  of  the  ter- 
ritories, and  can  better  judge  the  necessity  for  the  request, 
much  better  than  the  domestic  credit  man,  who,  of  necessity, 
is  guided  by  set  rules  and  justified  by  very  different  condi- 
tions. Liberalty  in  handling  credits  is  one  of  the  best  means 
of  creating  better  feeling  for  the  firm  and  greater  assurance 
of  pleasant  business  relations,  which,  in  the  last  analysis,  is 
the  best  business  developer. 

Duties  of  Correspondent  ^ 
Salesmam 

'*We  will  dissect  one  correspondent  salesman's  territory. 
This  man,  first,  should  correspond  in  the  languages  of  his 
territory  and  the  export  manager  should  hand  him  the  corre- 
spondence of  that  territory.  He,  in  turn,  after  looking  over 
the  orders,  will  see  the  credit  man  to  find  out,  first,  whether 
the  party  has  any  credit  on  the  books ;  second,  whether  he  has 
a  letter  of  credit ;  third,  whether  there  is  a  record  that  all  of 
the  drafts  which  have  been  drawn  against  him  have  been 
accepted,  unless  the  credit  has  been  issued  without  "recourse"; 
make  sure  that  if  the  date  of  maturity  has  arrived  the  drafts 
have  been  paid,  and  if  this  information  is  not  available,  calcu- 
late the  time  for  same,  and  if  such  time  has  expired ;  hold  the 
order  for  further  information,  which  may  be  obtained  by  com- 
municating with  the  bank  through  which  the  drafts  were 
sent,  or  by  telegraphing  direct  to  the  connecting  bank  at  the 
point  where  the  customer  is  located.  He  will  then,  if  every- 
thing is  in  order,  pass  the  order  to  the  order  derk  who  orders 


n  EXPORTING  TO  THE  WORLD 


the  goods  from  the  factory  (an  entirely  different  process  ixom 
the  export  commission  merchant,  who  would  in  such  case 
hand  the  order  to  the  purchasing  agent  to  buy  the  goods). 
When  this  letter  reaches  the  order  department,  sufficient 
copies  of  the  shipping  department  ticket  should  be  made  so 
that  the  copy  may  go  to  each  of  the  various  plants  or  factories 
where  the  goods  called  for  on  the  order  may  be  jmpared;  the 
object  being  that  each  plant  sends  the  part  of  the  goods  which 
they  are  aUe  to  supply  out  of  the  order.  Eadi  ticket  should 
have  tiic  same  order  number,  and  when  they  reach  the  stock 
room  they  would  be  specifically  marked  for  that  one  order 
and  in  this  way  get  the  goods  together  much  sooner  than  if 
the  stock  room  clerk  had  to  combine  different  order  numbeiB. 

Correspondent  Shonld 

Follow  Up  His  Orders 

"Having  passed  the  order  department  and  reached  the  ship- 
ping department^  the  correspondent  above  referred  to  should 
see  to  it  by  regular  visits  to  the  shipping  room  that  his  orders 
move  regularly  to  prevent  packers  from  dispatching  the 
smaller  and  easier  orders  in  preference  to  heavy  and  more 
complicated  orders ;  to  see  that  stencils,  binding  and  weights, 
gross,  net  and  legal,  conform  to  the  requirements  of  the  tariff 
of  tbe  country  of  destination,  and  also  to  be  able  to  get  an  idea 
as  to  the  size  and  weight  of  the  shipments  in  order  to  write  to 
his  freight  broker  to  engage  space  and  secure  shipping  permit 
for  the  transportation  of  the  merchandise  to  destination. 

How  Order  Proceeds 
Through  Deparime§ii 

•"When  the  goods  are  dispatched  and  billed,  the  invoices, 
which  should  be  made  in  Spanish  for  Latin- American  coun- 
tries and  show  the  net,  l^;al  and  gross  weights,  as  well  as 
the  measurement  <^  each  case,  and,  in  addition,  the  net  weight 
of  each  dass  of  item  packed  in  such  case,  should  then  be 
handed  froiq  the  billing  department  to  the  credit  department 
clerk  in  the  export  department,  and  the  railroad  freight  or 
express  receipt  is  also  to  be  handed  to  the  credit  clerk,  who 
will  proceed,  first,  to  insure  in  the  open  market  or  in  the  policy 
of  the  customer,  or  in  shipper's  own  open  policy,  covering  ^ 


I 


ORGANIZATION  OF  EXPORT  DEPARTMENT  33 

various  risks  for  breakage,  pilferage,  and  general  damage,  as 
required  by  the  customer  or  as  the  class  of  goods  necessitates, 
bearing  in  mind  that  insurance  should  cover,  not  only  the 
amount  of  invoice,  but  local  and  ocean  freights,  as  well  as  all 
shipping  charges;  an  addition  of  10  per  cent  generally  would 
cover;  then  follow  instructions  and  forward  the  necessary 
papers  and  invoices  to  the  freight  forwarder,  accompanied  by 
the  declaration  which  the  customer  supplies  for  the  purpose 
of  consular  invoice  at  the  seaport  and  a  certain  number  of 
copies  to  the  customer  abroad,  keeping  the  required  number 
to  supply  the  bank  when  drawing  for  the  value.  This  clerk 
should  be  the  custodian  of  the  letters  of  credit,  as  he  will  in 
some  cases  have  to  attach  these  to  the  invoices  and  drafts  to 
be  sent  to  the  bank  at  the  seaport  to  negotiate  when  the  freight 
broker  delivers  the  endorsed  steamship  bill  of  lading  to  the 
bank.  This  is  a  matter  which  the  manufacturers  in  the  interior^ 
points  of  the  United  States  have  to  be  very  partictilar  about 
as  the  consulates  of  the  various  foreign  countries  require  that 
the  man  who  signs  the  consular  invoices  be  duly  authorized 
by  the  manufacturer,  and  the  freight  broker,  to  whom  such 
authority  should  be  extended,  requires  thatJie  should  be  given 
the  exact  phraseology  that  the  customer  requires  used  in  the 
consular  invoice  for  his  goods.  The  clerk  doing  this  work 
must  be  trained  to  use  great  care  as  this  matter  demands  very 
careful  attention  because  in  most  foreign  countries,  particu- 
larly the  Latin-American  countries,  a  customer  in  any  one 
town  is  apt  to  wish  his  goods  classified  under  a  certain  para-^ 
graph  of  the  tariff  and  a  customer  in  another  town  may  re- 
quire the  same  goods  classified  under  a  separate  paragraph  of  . 
the  same  tariff,  and  any  deviation  would  be  apt  to  cause  heavy 
fines  at  the  Customs  and  the  manufacturer  would  face  a  heavy 
payment  in  addition  to  disturbing  pleasant  relations,  and  inas- 
much as  the  manufacturer  in  this  country  has  no  safe  guide 
as  to  the  interpretation  of  the  tariff  of  each  foreign  country, 
he  must  of  necessity  comply  with  the  wishes  of  his  customers 
or  else  not  accept  the  business. 

'•The  order  clerk  must  have  a  good  schooling  and  at  least  a 
course  in  a  business  college ;  be  familiar  with  the  metric  sys- 
tem so  that  carelessly  written  orders,  as  are  not  infrequently 
received,  will  be  interpreted  correctly ;  a  man  with  good  judg- 
ment to  interpret  an  order  and  who  would  know  when  not  to 
make  any  substitution ;  who  should  be  able  to  decode  a  cable 


84  EXPORTING  TO  THE  WORLD 

message,  and  who  should  be  somewhat  familiar  with  foreign 

languages  in  order  to  save  the  necessity  of  having  each  and 
every  order  translated  before  handing  it  to  the  order  clerk. 

Duties  of  the 
Pockmg  Defwriwmii 

**The  packing  department  should  be  provided  with  scales 
that  show  automatically  both  pounds  and  kilograms ;  the  ordi- 
nary scales  showing  pounds  only,  which  require  the  packer  to 
coni^  pounds  into  kilos,  are  the  cause  of  very  frequent 
takes,  which  means  excessive  payment  of  duties,  if  over,  and 
heavy  fines,  if  under  the  true  weights.  The  best  man  in  the 
domestic  packing  room  ,and  by  this  I  mean  the  most  careful 
and  not  the  man  who  turns  out  the  most  work,  should  be  the 
one  selected  to  do  foreign  packing,  as  very  frequently  eaeh 
item,  before  being  placed  in  the  packing  case,  must  be  weighed 
for  legal  and  net  weights  and  he  must  make  a  careful  record 
of  the  contents  ol  each  case,  as  when  the  invoice  is  made  by 
individual  cases,  each  numbered  in  rotation  in  series  with 
previous  shipments  to  a  certain  party,  it  saves  the  need  of  the 
cases  being  opened  by  the  customs  inspectors  at  the  point  of 
entry  in  the  country  of  destination,  for  when  the  goods  pass 
tiie  customs  they  are  frequently  shipped  to  interior  points  by 
crude  means  and  the  well  packed  case  which  has  not  been  dis- 
turbed will  stand  the  extra  travel  and  arrive  in  better  condition 
with  less  chance  of  pilferage  than  if  it  had  been  repacked  care- 
lessly by  laborers  at  the  custom  warehouse. 

Mamtfaeimnr  Should  Be 
Mmttter  of  Associaikm 

"The  firm  doing  export  business  should  become  a  member 
of  at  least  one  of  the  associations  which  are  in  such  a  worthy 
manner  assisting  the  manufacturers  in  this  country  to  devek^ 
expcMTt  busmess,  for  the  reason  that  in  an  emergency  when 
export  manager  in  a  small  town  wishes  to  compare  not^s  he 
can  write  to  the  association  for  information  and  also  because 
of  the  fact  that  such  associations  generally  have  periodicals 
in  which  they  publish  inquiries  from  foreign  buyers  and  keep 
die  caport  manager  in  touch  with  the  l^;i^tion,  changes  In 


ORGANIZATION  OF  EXPORT  DEPARTMENT  35 


shipping  and  tariffs,  political  disturbances  in  foreign  countries, 
etc.,  which  will  enable  him  to  better  handle  his  position. 

"We  note  that  of  late  governmental  departments  are  making 
eliorts  to  teach  foreign  trade  as  well  as  foreign  languages  in 
urban  universities  as  well  as  in  business  colleges  and  it  is  to 
be  hoped  that  to  enable  our  youth  better  to  ht  themselves  to 
assist  in  the  devek>pment  of  foreign  trade,  after  they  have 
graduated  from  high  school,  they  should  learn  export  tech- 
nique, as  follows: 

To  correspond  in  Spanish  and  French. 
To  study  the  history  of  Latin  and  Oriental  countries. 
To  practice  patience  in  dealing  with  people  of  other 
races  or  other  tendencies,  without  presuming  to  teach 
them  our  ways. 

To  be  accurate  and  careful,  considering  that  small  mis- 
takes, which  could  be  rectified  at  home  by  the  following 
mail,  would  cause  the  expense  of  cabling  or  heavy  fines 
abroad. 

To  obtain  a  very  good  knowledge  of  world  geography 
and  habits  of  the  people  of  other  countries. 
To  study  the  technique  of  marine  insurance. 

To  study  the  details  of  foreign  exchange  and  foreign 

moneys. 

"With  such  experience  we  should  in  a  few  years  create  a 
body  of  capable  export  merchants,  placing  our  nation  on  a  par 
with  European  merchants  'Who  have  been  developing  their 
youth  in  such  manner  for  many  years." 


I 


Chafhk  V 

THE  TRAVELING  SALESMAN  OVERSEAS 
Manufactuber  judged  by  man  in  the  field— Necbssaky 

QUALIFICATIONS  OF  TRAVELING  SALESMAN  ABBOAD>-— PREPARATIONS 

NECESSARY   FOR   TRIP  ABROAD — EXPENSES  OF  TRAVELING  SALES- 
MAN— ^Licenses  required  in  foreign  countries — The  combi- 
nation TRAVELING  SALESMAN 

}     The  success  or  failure  of  a  tnantifacturer  in  developing  him- 

ness  in  a  given  foreign  market  by  means  of  a  personal  represen- 
I  tative  on  the  field  will  depend  just  ius  much  upon  the  qualifica- 
•  tions  of  the  person  he  may  send  overseas  as  his  minister 
plenipotentiary  as  on  the  quality  or  utility  or  price  of  his  wares. 
Doubtless  the  manufacturer  who  decides  on  the  policy  of  selling 
abroad  by  using  coinmercial  travelers^has  on  his_jaiad  thie  plan, 
of  deyclopingja_p^manent  business.  It  is  the  fiiie8se»  therefore, 
with  which  he  mak^his  miroddctloir  that  is  going  to  determiiie 
ill  a  measure  the  success  he  may  expect  to  receive  in  futute 
dealings  with  foreign  customers.    It  can  readily  be  seen  that 
the  traveling  salesman  who  starts  on  his  journey  that  will  take 
him  to  di£Ferent  countries,  different  climes,  and  hring  him  in 
contact  with  peoples  of  different  races,  customs,  hahits  and  ways 
•of  thinking  is  charged  with  a  responsible  function.    His  job  is 
*o  blaze  a  trail,  to  gain  an  entree  and  to  inspire  confidence  in 
the  strange  manufacturer  thousands  of  miles  away  who  desires 
to  sell  articles  to  a  skeptical  buying  puUic   Most  likely  it  will ' 
be  the  £rst  unpression  made  that  will  decide  for  iSbe  native^ 
buyers.   The  impression  the  traveling  salesman  creates  is  the' 
impression  the  manufacturer  at  home  creates. 

Manufacturer  Judged  by 
Refreuntalwe  m  FiM 

The  manufacturer  is  judged  by  the  man  he  sends  overseas  to 
develop  his  business.    The  house  stands  to  win  or  lose  in  the 


86 


THE  TRAVELING  SALESMAN  OVERSEAS  8T 


ratio  of  the  ability  or  inability  of  the  travdii^f  salesman.  If  he 
is  stupid  or  incompetent  he  puts  the  house  in  a  bad  light.  The 
nation  as  a  whole  is  included  in  the  general  criticism.  He  fur- 
nishes our  fordgn  competitors  with  additional  material  for  en- 
gaging in  verbal  essays  on  the  "incompetency  of  the  Yankees." 

An  ignorant,  ill-mannered,  narrow-minded,  dishonest  or  in- 
competent commercial  traveler  in  the  foreign  field  is  worse  than 
no  salesman  at  alL    With  such  disqualifications,  he  is  not 
only  incapable  of  selling  goods,  but  capable  of  ^ling  tho 
market  for  the  finest  typewriter  ever  made  or  the  finest  auto- 
mobile or  piano  ever  turned  out  from  an  American  factory.  The 
author  recalls  the  eaq)ertence  in  Buenos  Aires  of  an  electrical 
appliance  salesman  who  fdt  that  his  time  was  more  valuable 
than  that  of  some  of  his  "prospects."   In  his  efforts  to  prove 
the  accuracy  of  this  theory  he  attempted  to  rush  matters  with  a 
certain  Argentine  gentleman  who  was  in  the  market  for  a  con- 
siderable quantity  of  ctectrical  parts  for  a  business  block  of 
which  he  was  proprietor-   The  order  involved  a  big  sum  of 
money  and  was  worth  going  after.  The  salesman  failed  to  take 
into  account,  however,  the  fact  that  the  temperament  as  possessed 
by  a  native  merchant  in  Argentina  is  very  much  different  from 
that  accredited  to  a  business  man  in  Lincoln,  Nebraska,  or  Cadil- 
lac, Michigan.  The  fonner  likes  to  take  his  time ;  the  latter  has 
placards  on  the  walls  around  his  desk  reading,  "Don't  ^  P^t  off 
until  tomorrow  'what  you  can  do  today,**  or  **Do  it  now,"  etc 

As  the  salesman  soon  learned,  the  native  refused  to  be  rubied 
into  the  transaction,  and  later  refused  to  have  further  dealings 
with  him  on  the  matter.  A  few  weeks  later  another  salesman 
carrying  a  similar  line  arrived  from  "The  States."  Through 
friends  ami  business  connectious  he  learned  of  the  native  mer- 
chant s  necessities.  In  toe  he  was  property  introduced.  In  con- 
versations  with  the  prospect  he  seemed  to  show  that  he  knew 
quite  a  little  about  the  country,  about  its  laws,  business  condi- 
tions, future  and  other  matters.  This  pleased  the  native.  By 
appointment  they  met  often  for  hmcheon.  Later  the  American 
was  invited  to  the  home,  where  he  met  aU  the  members  of  the 
family.  While  on  the  occasion  of  these  meetings  business  was 
discussed,  yet  it  did  not  have  the  right  of  way  over  other  topics 
of  common  interest  to  buyer  and  seller.  A  few  days  before 
sailing  for  the  United  States— a  month  after  his  arrival  in  the 
dty— the  satesman  meived  a  vis  t  at  the  hotel  from  the  merchant* 


38  EXPORTING  TO  THE  WORLD 


who  asloed  to  see  his  catalogue.  Before  he  kit  the  room  he  had 
sigfned  an  order  lor  several  thousand  dollars'  worth  ol  electrical 

fixtures. 

Traveling  Representative 
Must  Have  Broad  Vidan 

The  American  manufacturer  who  contemplates  sending  a  rep- 
resentative out  on  the  foreign  road  on  an  initial  tour  of  investi- 
gation should  have  a  ckar  conception  of  the  obligations  which 
he  imposes  upon  him.  He  is  not  only  a  seller  ol  goods,  hut  a 
judge  of  human  nature.  He  is  not  only  a  carrier  of  samples,  but 
the  interpreter  of  the  house's  mission  in  the  foreign  field.  He 
must  be  capable  ol  taking  the  initiative.  He  must  exercise  his 
own  ingenuity.  He  must  be  enterprising.  Obviously  such  tre- 
mendous responsibilities  assumed  thousands  of  miles  from  "the 
base  of  supplies'*  cannot  be  imposed  upon  irresponsible  and 
incompetent  agents.  In  making  his  selection  the  manufacturer 
must  watch  Ms  step.  N^ligence  in  the  judicious  coosideraftion 
of  the  "personality  dement"  may  lead  to  disaster.  The  shoals 
of  American  foreign  trade  are  strewn  with  the  wreckage  of 
ventures  where  too  much  attention  was  paid  to  promises  and 
dreams  and  too  little  to  proper  qualifications  and  personality. 
'Tht  salesman  must  have  a  broad  vision.  He  must  have  the 
international  viewpoint.  He  must  be  capable  of  meeting  people 
ol  different  races,  civilizations,  traditions  and  manners.  He  must 
maintain  a  sympathetic  attitude.  He  must  be  capable  ol  judging 
conditions  in  loreign  countries  as  they  are  and  not  as  they  should 
be.  He  must  not  be  tempted  to  criticise  things  because  they  do 
not  measiure  up  to  the  standards  he  is  accustomed  to  at  home. 
He  must  rememi)er  that  the  duel  lunction  ol  his  personal  mission 
is  to  sell  goods  where  thqr  may  help  to  raise  the  standard.  He 
must  know  how  to  obtain  essential  information,  such  as  credits, 
and  to  judge  the  trustworthiness  of  a  customer  without  causing 
embarrassment.  He  must  be  able  to  analyze  conditions  as  to 
transportation  and  distribution.  He  must  judge  of  the  buying 
power  of  the  community  in  which  his  firm  desires  to  do  business. 
He  must  fcimiliarite  himself  witii  the  prevailing  methods  ol 
financing  shipments  so  that  he  may  be  able  to  quote  prices  to 
his  customers  with  a  certain  de^ee  of  intelligence. 


THE  TRAVELING  SALESMAN  OVERSEAS  29 


Knowledge  of  Language 

Is  Not  the  Final  Test 

The  nationwide  movement  for  the  study  of  foreign  languages 
deserves  commendation.  The  American  people  should  not  only 
be  able  to  read,  write,  think  and  speak  in  their  own  language, 
but  they  should  also  have  a  general  knowledge  of  some  impor- 
tant foreign  language  like  French,  Spanish,  Italian  or  German. 
To  know  how  to  express  one's  self  in  a  foreign  tongue,  especially 
in  view  of  the  desire  of  Americans  to  extend  their  summer  trips 
to  lands  across  the  seas,  is  quite  an  advantage.  This  desire  to 
master  a  foreign  tongue  should  be  encouraged.  But  never  lor  a 
moment  should  the  impression  be  permitted  to  run  wild  that  for 
strictly  business  reasons  the  knowledge  of  one  or  two  foreign 
languages  is  absolutely  necessary.  It  is  not.  For  over  fifty  years 
the  American  nation  has  been  engaged  in  a  lucrative  loreign 
trade  which  has  been  growing  and  growing  into  large  dimensions. 
Yet  no  one  can  justly  daim  tiiat  the  American  business  men 
are  experts  in  foreign  languages.  As  a  matter  of  fact  it  is  neg- 
lect of  this  detail  in  connection  with  fofeign  trade  expansion 
that  has  loosed  a  number  of  critics  upon  an  innocent  flock  ol 
embryo  exporters,  charging  them  with  expresnoos  ol  warning 
that  they  must  be  able  to  speak  the  tongue  ol  the  loreigner  hi 
order  to  get  his  business. 

Salesman's  Ability  to 
Sell  Goods  Comes  First 

II  the  manufacturer  relies  solely  on  the  salesman's  ability  to 
converse  in  any  language  from  Russian  to  Chinese  and  not  on 
his  competency  as  a  salesman  of  wares  he  is  going  to  suffer  by 
it  Selling  ability,  couf^ed,  ol  course,  with  honesty,  comes  first 
The  case  ol  a  manulacturer  who  was  induced  to  lumish  a  sub- 
stantial expense  account  and  an  adequate  salary  to  a  young 
Chilean  who  was  to  represent  him  in  the  country  of  his  birth 
is  recalled  here.  The  young  man,  who  knew  nothing  about  busi- 
ness practice,  but  very  much  about  his  own  country  and  people, 
''sold  himsell"  to  a  manulacturer  on  the  strength  ol  this  experi- 
ence at  home.  Alter  several  months  ol  watchlul  waiting  the 
manufacturer  learned  to  his  sorrow  that  his  employe  might  have 
better  served  him  in  the  capacity  of  a  translator— lor  he  waa  a 


40  EXPORTING  TO  THE  WORLD 


graduate  of  a  college  of  Liberal  Arts,  and  not  of  a  college  of 
business  experience. 

"Can  you  sell  goods?"  This  is  the  first  question  that  should 
he  fired  at  the  applicant  "I  am,  of  course,  deeply  interested  in 
your  ability  to  speak  Spanish  or  French,  but  my  chief  concern 
lies  in  your  ability  to  convince  the  foreign  buyer  that  he  should 
give  my  article  a  trial."  This  should  represent  the  manufac- 
turer's second  step  in  considering  the  application.  Then,  having 
convinced  himself  by  actual  proof  or  record  that  the  man  before 
him  is  capable  of  selling  his  merchandise,  the  manufacturer  must 
feel  satisfied  in  his  own  mind  after  proper  inspection  that  there 
is  an  mr  of  good  breeding  and  culture  in  the  applicant  that 
cannot  be  overloc^ed.  Needless  to  say,  neatness  in  perscMul 
appearance  is  a  vital  detail  that  very  few  successful  salesmen, 
whether  at  home  or  abroad;  seldom  overlook. 

Sig^seemg  Salesmen 
Shmdd  Be  Avoided 

t 

A  curiosity  to  see  the  world  often  inspires  young  men  to  enter 
the  manufacturer's  office  looking  for  a  traveling  salesman's  posi- 
tion in  foreign  countries.  The  manufacturer  who  is  looking  for 
permanent  cmmections  abroad  should  be  on  his  guard  against 
such  applicants.  A  tour  of  the  world  should  not  be  made  at  tiie 
expense  of  the  manufacturer  unless  that  tour  is  capable  of  coat' 
iiianding  adequate  results.  Salesmanship  cannot  be  combined 
with  pleasure.  To  make  a  tour  of  certain  countries  profitable  for 
employer  and  employe  alike  the  salesman  should  make  it  his 
vocation  and  not  his  avocation.  The  story  is  told  of  a  manufac- 
turer who  once  permitted  a  young  man  to  book  orders  for  him 
in  Australia.  Ignorant  of  the  methods  of  quoting  prices  to  over- 
seas customers,  the  salesman  was  taking  orders  that  were  im- 
possible of  fulfillment.  The  manufacturer  at  home  was  forced 
to  cancel  them  by  cable  in  order  to  avoid  financial  loss.  It  took 
much  correspondence  and  many  days  in  which  proper  explana- 
tions were  foially  made. 

Other  Qualifications, 
Honesty,  Responsibility 

That  the  manufacturer  should  carefully  eiamtne  the  ^>plt- 


THE  TRAVELING  SALESMAN  OVERSEAS  41 


cant's  qualifications  as  to  honesty  and  responsibility  goes  without 
saying.  Honesty  is  f^^  Hasifi  ^f  t^iicin^Qc  rp\^^\nn^.  A  dishonest 
and  irresponsible  salesman  can  easily  destroy  a  manufacturer's 
business  in  a  given  market.  There  is  no  need  of  emphasizing 
the  necessity  of  guarding  against  such  representatives.  The  ex- 
perienced manufacturer  can  protect  himself.  It  is  the  manu- 
facturer who  is  jtist  branching  into  the  foreign  field  and  who  is 
almost  daily  coming  in  contact  with  hundreds  of  men  with  hun- 
dreds of  ideas  of  developing  the  fordgn  field  who  must  be 
careful  in  the  choosing. 

Courage  and  self-confidence  foUow  honesty.  The  salesman 
should  have  the  ability  to  hold  his  ground  even  in  the  face  of 
adversity.  In  spite  of  discouraging  results  at  the  start  he  should 
have  the  abiUty  to  "stick  to  it.'*  Of  necessity  he  must  put  up 
with  many  inconveniences  while  on  the  road,  and  quite  often  his 
patience  will  be  tried,  but  if  he  can  survive  these  trials,  in  the 
end  the  harvest  should  be  big. 

Salesman  Shonld  Prepare 

Himself  Well  for  Trip 

There  is  consideraWe  preliminary  work  ahead  for  the  traveling 

salesman  who  is  planning  his  first  trip  to  foreign  countries  where 
the  language  and  customs  are  different,  where  he  will  find  him- 
self involved  with  different  laws  and  regulations,  and  where  prob- 
lems of  marketing  and  transportation  must  be  successfully  solved 
before  any  measure  of  success  in  a  selling  campaign  may  be 
attained.  He  should  begin  at  the  factory.  Here  he  should  study 
the  various  products  made,  of  what  they  are  made  and  how 
they  are  made.  A  foreign  customer's  rapid  fire  questions  involv- 
ing answers  of  a  technical  character  may  prove  embarrassing  to 
tlie  salesman  who  is  not  well  posted  on  his  goods.   While  he  is 
cqttipping  himself  with  a  knowledge  of  the  production  end  of 
the  business  he  should  also  be  giving  some  time  to  the  study  of 
the  countries  through  which  he  is  to  travel.    He  should  know 
something  about  market  conditions;  he  should  know  something 
about  the  climate,  geography,  language,  customs,  history,  trans- 
portation facilities  and  regulations  of  each  country.   He  should 
be  well  read. 


I 


48  EXPORTING  TO  THE  WORLD 

Study  of  Method  of 
Travel  Is  Essential 

In  planning  his  trip  the  salesman  should  prepare  an  itinerary 
so  that  he  may  have  an  approximate  idea  of  the  time  his  journey 
will  require  and  the  season  in  which  he  is  to  arrive  in  a  certain 
country.  His  itinerary  should  not  be  inmdad,  however,  as  tlie 
change  in  the  date  of  a  steamer  sailing  at  one  point  may  throw 
his  schedule  completely  out  of  gear.  The  steamship  companies 
are  the  proper  sources  for  information  as  to  routes,  sailing  dates 
and  distances  between  ports.  In  in-eparing  his  tour  the  salesman 
most  remember  that  the  entire  world  does  not  enjoy  the  same 
seasons  at  tiie  same  time.  When  it  is  summer  in  the  United 
States  it  is  winter  south  of  the  Equator.  The  salesman  who  is 
planning  to  reach  a  certain  market  at  the  best  buying  season  of 
the  year  should  be  very  careful  that  his  schedule  does  not  take 
him  to  the  market  when  his  prot^ecttve  customers  are  enjoying 
tliemselves  at  the  seashore. 

Documents  Salesman 
Slwidd  Carry  Along 

The  salesman  shotdd  not  leave  the  OQHtaST  without  proper 
credentials  indicating  his  authority.   This  is  very  important,  as 

i>  is  necessary  to  show  some  proof  of  power  to  transact  business 
in  certain  countries.  In  Denmark,  for  instance,  the  agent  must 
produce  either  an  attest  from  his  home  government  c^&dals  giv- 
ii^  his  name  and  that  of  the  firm  which  he  represents,  or  a  power 
of  attorney  issued  by  his  firm  and  certified  to  by  some  notary  public 
as  well  as  by  the  Danish  consul.  If  such  document  is  not  pro- 
duced within  a  certain  time  the  salesman  will  be  subject  to  a  fine. 
The  Danish  authorities  demand  the  following  form: 

I,  ,  one  of  the  directors  of  the  Joint  Stock  Com- 
pany  or  partner  of  the  firm  

(New  Yofk),  declare  hereby  that  Mr.   is  the 

company's  traveling  representative  in  Denmark. 

Countersigned  .     New  York,  ,  1919. 

Date  

Police  Superintendent  

While  this  document  is  not  absolutely  necessary  in  every  coun' 


THE  TRAVEUNG  SALESMAN  OVERSEAS  43 


try  visited,  nevertheless  good  business  judgment  dictates  that  it 
or  something  similar  shouTJTeln  the  possession  of  every  sales- 
i^SH  w^o  lsl^oI^mto  foreign  countries.  A  certificate  from^the 
Fresident_of  Jh<>  Ch^nber  of  Commc;rrft,  f"«» 
large  organization  is  valuable  to  carry  along.   Letters  from  con- 
sular agents  or  other  government  officials  will  help  where  proper 
introductions  to  municipal  or  state  authorities  in  foreign  coun- 
tries are  necessary  before  they  are  approached  on  business  mat- 
ters.  Letters  of  introdiKtign  are  not  necessary  unless  they  are 
writteiTto  intimate  friends  or  to  persons  with  whom  the  writers 
of  these  letters  have  been  in  close  relations  through  correspond- 
ence. The  manufacturer's  banker  wiU  provide  the  representative 
with  letters  of  introduction  to  the  managers  of  the  branches  in 
the  different  countries  or  to  correspondents  where  thw  are  no 
branches.    These  letters  should  not  be  neglected.    They  may 
help  the  salesman  in  obtaining^valuable  information.    In  some 
countries  bankers  refuse  to  give  travelers  any  information  unless 
they  produce  the  necessary  letters  of  jiUXLQducM"'  This  is  usually 
the  rule  in  certa^Bntish  colonies.   Passpo'rts  should  be  carried 
along.   They  are  very  handy  instrumoits  when  the  unes^ected 
happens  in  a  foreign  country.  Properly  viseed,  they  should  form 
one  of  the  list  of  valuable  documents  in  the  salesman's  belong- 
ings.   The  passport  bureau  of  the  State  Department  should  be 
consulted  in  connection  with  information  regarding  passports. 

Hon-  Salesman  Obtains 
His  Futuis  on  the  Road 

The  banker's  letter  of  credit  is,  perhaps,  the  most  satisfactory 
instrument  in  the  salesman's  possession  for  obtaining  funds  alqng 
the  various  points  on  his  journey.  The  banker's  letter  of  credit 
has  some  advantages  over  other  instruments  aimed  to  achieve  the 
same  end.  In  the  first  place,  it  enables  the  manufacturer  to 
finance  the  salesman's  trip  without  actually  drawing  the  entire 
amount  from  the  bank  at  once.  If  the  face  value  of  the  letter 
of  credit  represents  $5,000  and  the  salesman  draws  $1,000  at 
some  point  in  Europe  the  bank  merely  charges  the  manufacturer 
an  equivalent  amount  against  his  balance.  Banks  and  express 
companies  are  accustomed,  also,  to  issue  "traveler's  checks"  for 
the  convenience  of  travelers.  These  ''checks"  command  a  higher 
rale  of  interest  than  the  letter  of  credit,  however,  and  must 


41  EXPORTING  TO  THE  WORLD 


be  purchased  outright,  thus  compelhng  the  manufacturer  to  draw 
out  a  lump  sum  equivalent  to  the  entire  expense  involved  in  the 
trip.  In  connection  with  this  topic  it  is  proper  at  this  time  to 
call  to  the  attention  of  the  salesman  the  necessity  of  knowing 
something  about  foreign  exchange.  Total  ignorance  of  this  may 
cause  him  considerable  financial  loss  as  well  as  to  render  him 
incapable  of  discussing  problems  of  international  finance  with 
his  customers^ 

Approximate  Expenses 
of  Traveling  Salesnum 

Tne  expenses  ot  a  traveling  salesman  depend  on  the  nature  of 

his  mission.  If  he  is  to  visit  the  regular  trade  and  confine  himself 
to  very  little  entertaining  it  is  possible  that  his  expenses  will  be 
from  $10  to  $20  a  day,  including  steamer*  and  railroad  fares  and 
hotel  expenses.  If,  however,  he  has  been  ei^;aged  to  interview 
some  of  the  business  men  occupying  hig^  positions  in  foreign 
countries  it  will  mean  social  life  and  entertaining.  This  comes 
high.  If  he  carries  many  samples  his  expenses  will  be  much 
higher  than  if  he  should  carry  only  a  few. 

License  Fees  and 

Payment  of  Duty  on  Samples 

In  many  countries  of  the  world  license  fees  are  required  from 
traveling  salesmen.  Also  a  duty  is  imposed  on  the  samples  car- 
ried. While  it  is  impossible  to  make  a  definite  statement  regard- 
ing the  fee  and  duty  requirements  in  some  European  countries, 
it  may  be  said  for  the  information  of  the  traveling  salesman  that 
in  most  Latin-American  countries  he  will  be  compelled  to  ^y 
a  nmninal  license  fee,  sometunes  a  very  high  one,  as  well  as  a 
duty  on  the  samples  he  carries  akmg  with  him.  As  a  general  rule, 
howev^,  samples  without  commercial  value  are  usually  admitted 
free  of  duty  without  special  formalities,  while  other  samples  are 
admitted  under  bond  or  upon  the  deposit  of  an  amount  sufiicient 
to  pay  the  duty  in  case  of  failure  to  re-eacport  them  within  a 
certain  time  hiait. 

License  Fees  and  DuHes  an 
San^s  m  VoHous  Connhies 

Owing  to  changing  conditions  in  various  countries  it  is  difficult 


THE  TRAVELING  SALESMAN  OVERSEAS  45 


to  obtain  definite  data  on  license  fees  and  duties  on  samples. 
However,  a  short  digest  of  tlie  requirements  in  some  countries 
as  collected  by  the  Government  Bureau  of  Foreign  and  Domestic 
Commerce  wiU  serve  as  a  basis  from  which  a  start  may  be  made 
to  gather  the  latest  possible  information  on  these  matters  prior 
to  starting  out  to  foreign  fiields.  In  the  countries  listed  here  the 
following  regulations  prevail : 

Belgium— Commercial  travelers  exempt  from  payment  of 
license.  Samples  deprived  of  their  commetdal  value  admitted 
free,  otherwise  subject  to  same  customs  treatment  as  goods  they 
represent. 

Denmark— Commercial  travelers  must  have  power  of  attorney 
in  order  to  obtain  license,  which  is  valid  for  one  year.  Samples 
subject  to  duty,  but  if  re-exported  within  four  months  and  proof 
furnished  as  to  their  identity,  duty  b  returned. 

Iceland— Foreign  commercial  travelers  must  take  out  license 
in  their  own  names.  License  fee  is  about  $53.60  if  traveler  repre- 
sents but  firm  and  about  $13.40  for  each  additional  firm. 
License  good  for  one  year  from  date* 

France— Commcrdal  travders  may  operate  free.  It  is  advisa- 
ble, however,  that  they  produce  documents  showing  that  they 
are  commercial  travelers  and  not  brokers.  Brokers  are  subject 
to  tax.  Samples  admitted  free  on  condition  of  being  re-exported 
within  one  year  or  placed  within  bonded  warehouse. 

Greece— No  Hcense  fees  imposed  on  commercial  travelers. 
Samples  without  commercial  value  admitted  free,  others  charged 
regular  duties  under  Greek  customs  tariff. 

Italy — No  license  restrictions.  Samples  of  no  commercial  value 
admitted  free,  while  those  subject  to  duty  admitted  temporarily 
under  dq[K>sit  or  bond  to  be  refunded  on  re-exportation  within 
one  year. 

Netherlands — Only  direct  tax  imposed  on  commercial  travelers 
is  on  professional  income,  provided  they  are  not  domiciled  in  the 
country.  Samples  of  no  value  admitted  without  duty.  Samples 
of  value  granted  temporary  exemption. 

Norway — ^Trading  license  required  for  commercial  travelers, 
which  are  good  for  thirty  days.  Samples  not  objects  of  trade 
admitted  free  of  duty. 

Portugal — ^Any  foreigner  remaining  in  Portugal  over  period  of 
seven  days  must  obtain  from  his  consulate  ''residence  certificate," 
whidi  must  be  endorsed  1^  police  authorities.  Samples,  excqvt 


40 


EXPORTING  TO  THE  WORLD 


mamilactttred  tobacco,  free  of  duty  provided  duty  leviable  does 
not  exceed  30  cents. 

Spain — Commercial  travelers  showing  proof  of  employment  in 
that  capacity  not  subject  to  license  fees.  Samples  without  com- 
mercial value  admitted  free  of  duty. 

Swcdeii--Cofnniercial  travelers  most  obtain  license*  which  is 
good  for  thirty  days.  Additional  fee  charged  for  every  fifteen 
days  after  first  thirty  days.  Samples  of  no  commercial  value  not 
subject  to  duty,  others  subject  to  duty  which  is  recoverable  on  re- 
esqKMtatiofi. 

Switzerland — ^No  license  fee  required.  All  oommercial  travel- 
ers must  have  certificate  of  authority  from  proper  authorities  of 

their  country  showing  that  the  house  they  represent  is  entitled 
to  do  business  in  the  state  in  which  it  is  situated.  All  commercial 
travelers  must  obtain  permit  Samples  of  no  market  value  ad- 
mitted free. 

United  Kingdom— No  permit  or  ficense  required  to  enable 
commercial  travelers  to  do  business  in  the  United  Kingdom. 

Articles  liable  to  duty  on  importation  into  United  Kingdom  serv- 
ing as  samples  introduced  by  commercial  travelers  from  the 
United  States  and  other  countries  having  special  treaties  with 
Great  Britain  admitted  free  of  duty  subject  to  security  or  bond. 

Argentina— Commercial  travelers  required  to  obtain  license  in 
city  of  Buenos  Aires  when  they  carry  samples;  and  separate 
license  for  every  province  and  territory  in  which  traveler  desires 
to  operate.  In  Federal  District  he  is  not  required  to  take  out 
ficense  if  he  sells  from  catalogue  and  without  samples.  Fees 
payable  for  tiiis  license  in  iht  various  provinces  differ  in  amount 

There  is  a  way  of  avoiding  payment  of  these  licenses,  how- 
ever. American  firms,  as  well  as  European  houses,  usually  assign 
their  travelers  to  some  large  importing  house  established  in 
Buenos  Aires,  under  whose  auspices  they  work,  thereby  avoiding 
payment  of  any  license  fee.  Even  when  the  traveler  goes  into 
die  provinces  he  need  not  pay  additional  licenses,  because  these 
importing  houses  usually  maintain  agencies  or  branches  in  the 
principal  cities  to  which  the  traveling  salesman  is  assiq-ned.  Pay- 
ment of  license  fees  in  each  of  these  provinces  would  involve  a 
large  sum  of  money.  Samples  having  no  commercial  value  are 
admitted  free.  Others  may  be  broi^t  under  bond. 

Bolivia — ^Each  city  imposes  local  tax,  which  is  compulsory. 
Collection  of  taxes  on  commercial  travelers  rests  with  conces- 


THE  TRAVEUNG  SALESMAN  OVERSEAS  47 


^onaires,  from  whom  travelers  may  obtain  a  reduction  from  the 
rate  fixed  by  municipal  ordinance.  Samples  having  no  commer- 
cial  value  may  be  imported  duty  free,  while  others  may  be  im- 
ported under  bond. 

Brazil— No  license  for  commercial  travelers  required  by  the 
Federal  Government,  although  there  is  a  tax  in  some  States. 
Samples  admitted  free  under  bond  only  when  goods  are  accom- 
panied by  consular  invoice  from  the  country  of  origin  and  a 
memorandum  setting  forth  in  detail  the  articles  contained  in  the 
various  packages. 

Chile— No  licenses  are  required.  Salable  samples  may  be  im- 
ported for  period  of  six  months  upon  security  furnished  by  local 
business  house  to  cover  full  amount  of  duty  to  which  samples 
would  be  subject  as  merchandise  or  upon  cash  deposit  of  equal 
amount  by  importer. 

Colombia — No  license  required  for  commercial  travelers.  Some 
dties  have  mtmicipal  tax  and  traveler  must  secure  Ucense  before 
exhibiting  samples.  Constdar  invoice  in  Spanish  covering  sam- 
ples and  certified  by  G>lombian  consul  at  port  of  embarication 
necessary.  Samples  may  be  imported  temporarily  upon  payment 
of  full  duty,  with  refund  of  75  per  cent,  of  duty  upon  re-exporta- 
tion. Samples  of  no  commercial  value  admitted  free. 

Costa  Rica— Commercial  traveler  is  required  to  obtain  from 
municipal  treasurer  permit  to  do  buriness  in  the  district,  which 
is  only  valid  within  the  municipal  limits.  License  fees  vary  in 
each  district.  Samples  without  commercial  value  dutiable  at 
$1.05  per  hundred  pounds.  Samples  of  value  intended  to  be  re- 
exported subject  to  duty,  which  will  be  returnable  upon  certain 
conditicms. 

Cuba — ^No  license  required  for  commercial  travelers.  All  sam- 
ples of  dutiable  merchandise  pay  full  duty  upon  entry,  but  if  re- 
exportation is  effected  within  ninety  days  and  value  is  not  over 
$500,  75  per  cent,  of  the  duty  will  be  refunded. 

Dominican  Rq;mblic — Commercial  travelers  must  take  out  an- 
nual license,  which  costs  $10.  Unsalable  samples  admitted  free. 
Samples  not  exceeding  $2,000  in  value  may  be  admitted  free 
under  bond. 

Ecuador — Commercial  travelers  require  license  from  inspector 
of  customs  before  baggage  and  samples  will  be  permitted  to  enter 
country.  Samites  of  value  admitted  under  bond. 

Guatemala — ^No  Hcenses  are  required  for  commercial  traveler. 


48  EXPORTING  TO  THE  WORLD 


All  samples,  except  those  withont  commerdal  yalue  on  mbkh 

duty  does  not  exceed  1  peso,  subject  to  regular  duties  unless 
rendered  unsalable.  If  samples  are  to  be  re-exported  no  duty  is 
charged  upon  providing  bond. 

Haiti---G»ttniercial  traveleni  require  permit  from  the  Deport- 
ment of  the  Interior,  to  be  obtained  before  the  travdcr  kaves  Urn 
city  for  another  part  of  the  country.  Samples  of  no  commercia] 
value  admitted  free  of  duty. 

Honduras — Commercial  travelers  are  subject  to  municipal 
license  fees  onfy.  Samples  destined  to  be  re-ea^rted  admitted 
on  deposit  equal  to  amount  of  duty  kviahk. 

^Mexico— Law  s  governing  commercial  travelers  unobtunaUe 
owing  to  abnormal  political  conditions.  Samples  of  commercial 
value  dutiable,  but  admitted  under  bond  subject  to  re-exportation. 

Nicaragua— Commercial  travders  not  subject  to  license  fees. 
Bond  required  on  samples  brous^t  in  and  subject  to  fe-expQrt»- 
tkm. 

Panama — All  commercial  travelers  must  take  out  municipal 
license  in  district  in  which  they  are  to  transact  business.  Samples 
of  commercial  value  subject  to  re-exportation  admitted  under 

 a 

INJUU* 

Paraguay — Commercial  travders  must  take  out  municipal 
license.  Samples  of  commercial  value  admitted  upon  payment 
of  duty,  which  is  refunded  upon  re-exportation. 

Peru — Commercial  travelers  not  required  to  take  out  govern* 
ment  license,  but  are  subject  to  nnmicipal  taxes  in  interior  towns. 
Samples  of  any  kind  not  prohibited  by  customs  kws  may  be 
imported  free  for  limited  time  under  certain  conditions. 

Salvador — The  only  official  license  required  of  a  commercial 
traveler  is  issued  by  the  local  municipalities.  All  samples  im- 
ported free  under  bond,  which  is  canceled  upon  re-exportation. 

Uruguay--Comnierdal  travelers  required  to  take  out  a  license 
which  is  valid  for  one  year.  Samples  of  any  kind  may  be  tem- 
porarily imported  free  of  duty  by  giving  bond  to  guarantee  re- 
exportation. 

Venezuela — ^No  licenses  are  required  from  commercial  travd- 
ers.  Sami^  of  commercial  value  admitted  free  aubject  to  bond 
to  guarantee  their  re-cxpottation. 

Australia — There  are  no  laws  or  regulations  affecting  com- 
mercial travelers.  Dutiable  samples  admitted  upon  depositing 
duty  with  customs,  which  will  be  refunded  upon  re-exportation. 


THE  TRAVELOG  SALESMAN  OVERSEAS  49 


New  Zealand— Warrant  free  of  charge  is  issued  to  commer- 
cial travelers,  but  those  who  seek  to  avoid  it  are  subject  to  fine. 
Samples  dutiable,  but  when  re-exported,  refund  is  made. 

It  will  be  aeen  from  this  resume  that  the  commercial  traveler 
is  subjected  to  different  license  fees  in  aU  parts  of  the  world.  In 

some  places  these  fees  are  rather  high  and  it  is  possible,  as  has 
been  already  suggested  in  connection  with  the  Argentine  require- 
ments, to  avoid  them  in  some  countries  by  making  connections 
with  establishd  importers.  It  is  an  easy  matter  to  do  this  when 
the  salesman  is  emi^yed  by  an  American  concern  having 
branches  or  agencies  in  foreign  countries ;  but  where  the  sales- 
man  or  the  house  may  be  unknown  a  proper  letter  of  introduc- 
tion may  effect  some  sort  of  connection  in  which  the  high  license 
fee  may  ethically  be  avoided. 

IThc  salesman  will  also  save  himself  considerable  trouble  by 
havmg  with  hhn  several  coj^es  of  an  invmce  of  his  samples  so 
that  the  customs  officials  may  expedite  the  examinatkm  of  his 
baggage.  The  invoice  should  include  the  full  description  of  the 
articles,  gross  and  net  weights  in  pounds  and  kilos,  and  the 
values  at  which  they  would  be  sold  to  the  trade.  These  invoices 
should  be  viseed  by  the  consuls  of  the  countries  to  be  visited. 


The  Combination  Traveling 
SaUman  in  Export  Trade 

As  die  United  States  is  extendmg  its  trade  moire  and  more 
every  day  new  problems  are  being  constantly  presented  to  the 

manufacturer  who  has  joined  the  growing  list  of  exporters.  One 
of  these  problems  involves  economy  in  developing  the  field  by 
personal  representation.  The  manufacturer  who  foots  the  entire 
bill  in  sending  a  salesman  to  certain  foreign  countries  will  kam 
that  it  is  ratiier  expensive.  There  is  a  way  to  avdd  this  heavy 
expense,  however,  and  at  the  same  time  obtain  proper  representa- 
tion in  the  foreign  field.  This  is  by  using  the  services  of  a  sales- 
man who  undertakes  to  carry  one  or  several  lines  on  a  business 
tour  of  several  countries.  This  kind  of  commercial  traveler  is 
commonly  known  as  a  combination  traveling  salesman. 

The  combination  travding  salesman  operates  along  the  follow- 
ing lines:  He  decides  on  a  certain  territory  to  be  covered;  he 
studies  the  possibilities  of  that  territory  for  the  sale  of  certain 
articles  the  representation  of  which  he  will  endeavor  to  obtain 


80 


EXPORTING  TO  THE  WORLD 


after  he  is  satisfied  that  there  is  a  market  for  them.  He  then 
places  his  proposition  before  the  manufacturers  of  these  articles, 
offering  to  solicit  the  foreign  trade  upon  the  payment  of  a  def- 
inite proportion  of  his  entire  expenses  on  the  trip.  Each  manu- 
facturer in  the  combinati<m  must  contribute  his  proportion  of 
the  expense.  In  some  cases  the  combination  salesman  obtains  a 
commission  and  in  others  a  definite  sakry.  It  is  generaUy  on  a 
commission  basis  plus  expenses,  however,  that  the  arrangem«t 
between  manufacturers  and  combination  salesmen  is  completed. 

Combination  SalesniM 
Must  Be  Qualified 

Economy  should  not  be  the  bait  upon  which  the  manufacturer 
is  to  be  drawn  into  a  combination  salesmanship  proposition.  The 
combmation  salesman  must  be  as  fully  quahfied  for  foreign  work 
as  the  salesman  who  is  the  sole  representative  of  a  single  house 
in  the  United  States.   Unless  he  possesses  the  necessary  attrib- 
utes the  saving  to  be  gained  by  the  combination  may  result  in 
loss  in  some  other  way.  There  b  no  denying  the  fact,  however, 
that  an  intelligent  and  competent  representative  should  be  capable 
of  splendid  service  to  the  manufacturer  to  whom  the  combma- 
tion idea  may  appeal.   It  has  been  tried  before  and  satisfactory 
results  have  been  obtained.   In  order  that  the  manufacturer  may 
seriously  amsider  his  proposition,  however,  the  combination 
salesman  must  prove  that  he  not  <mly  has  had  experience  as  a 
salesman,  but  that  he  has  had  experience  in  the  field  to  be  cov- 
ered that  he  knows  prospects  and  busmess  conditions  m  the  pro- 
posed territory,  and,  finally,  that  he  has  a  general  knowledge  of 
the  ku^uage  in  that  territory.   In  addition  to  this,  good  judg- 
ment as  to  credits  and  market  conditions  are  valuable. 

How  Manufacturer  May  Be 

Approached  by  Salesman 

Personal  soUdtation  is  the  most  effective  method  of  reaching- 
tile  car  of  the  manufacturer  on  a  proposition  such  as  the  combi- 
nation salesman  is  propoang.  Letter  writing  is  madequate.  A. 
personal  talk  wHh  the  salesman  will  give  the  manufacturer  8 
better  idea  of  the  capabilities  of  the  man  than  perhaps  a  hundred 
kttm  The  combination  salesman  who  resides  in  a  large  port 


f        THE  TRAVELING  SALESMAN  OVERSEAS  51 

like  New  York  City  has  a  fine  opportunity  of  interviewing  a 
select  number  of  manufacturers  who  may  be  interested.  Even 
then  the  matter  of  getting  tc^ther  a  number  of  manufacturers 
will  not  be  so  easy.  The  combination  salesman's  plan  should  be 
something  like  this:  (a)  Select  goods  with  which  he  is  best 
acquainted;  (b)  devetop  a  sales  plan  consistent  with  the  territory 
he  is  to  cover;  (c)  approach  most  desirable  manufacturers  of 
articles  he  has  listed  for  his  combination.  The  salesman  shoukt 
be  careful  that  his  combination  involves  only  allied  lines  if  pos- 
sible.  It  will  make  his  work  much  easier. 

It  is  possible  that  the  manufacturer  himself,  with  a  number  of 
others,  may  desire  to  form  a  combination  on  their  own  initiative. 
In  this  case  a  successful  comtnnation  may  be  worked  up  by  having 
each  manufacturer  contribute  his  best  line  to  the  comlnnation, 
agree  on  a  fixed  amount  to  be  spent,  and  on  one  executive  to  select 
a  salesman  and  direct  his  efforts  in  the  foreign  field.  The  virtue 
of  such  arrangement  lies  in  centralized  authority,  and  the  ship- 
ment of  goods  on  one  bill  of  lading,  and,  possibly,  the  financing  on 
one  draft.  The  advantages  of  this  method,  however,  may  be  lost  if 
the  combination  docs  not  work  in  harmony.  Petty  jealousies  may 
destroy  its  efficiency,  and  finally  the  c(Hnbination  itself. 

Advantages  of  the 
CombmaHon  Salesnum 

A  single  house  may  spend  $6,000  on  a  trip  by  a  personal  repre- 
sentative to  South  America  or  to  the  Far  East.    Six  houses 
joining  in  a  combination  where  one  salesman  has  agreed  to  carry 
the  various  lines  of  each  house  to  either  of  these  foreign  fields 
would  contribute  their  proportkm  of  the  total— say,  $1,000  each. 

The  advantage  of  a  combination  salesman,  it  will  be  seen,  lies 
in  the  economy  of  the  plan.  Again,  the  manufacturer  may  have 
a  "short  line"  that  may  not  justify  intensive  selling  methods 
abroad.  The  combination  salesman  may  find  it  to  his  advantage 
to  carry  this  "short  line/'  partkularly  if  it  is  alUed  to  the  other 
products  he  already  represents.  An  assorted  line  of  kindred 
products  will  attract  more  buyers  than  one  line  alone.  Any  one 
of  the  manufacturers  represented  in  the  combination,  therefore, 
will  have  a  better  chance  of  obtaining  a  trial  order  than  if  they 
were  alone  in  the  field.  The  "short  line"  manufacturer  has  as 
good  a  chance  as  the  others. 


8S  EXPORTING  TO  THE  WORLD 

Objections  to  a 
Combination  Salesman 

The  combination  salesman  who  cames  many  lines  must  of 
necessity  ''scatter  his  shot"  He  cannot  pay  too  much  attention  to 
one  line  at  the  expense  of  the  others.  This  is  more  often  tiie 
case  where  the  combmatioii  salesnum  represents  several  Imes 
that  have  no  rektioa  to  each  other.  A  salesman  handling  lines 
ranging  from  needles  to  pianos  may  not  be  as  successful  as  one 
who  handles  allied  lines.  The  failure  of  many  combination  sales- 
men in  the  foreign  field  has  been  due  to  the  neglect  of  this  im- 
portant phase  of  the  plan.  In  the  smaller  cities  it  is  possihle  to 
sell  tiie  dealers  almost  anythii^,  hot  when  the  larger  cities  are 
approached  it  will  be  necessary  for  the  combination  salesman 
who  handles  unrelated  wares  to  cover  a  wide  buying  field  at  the 
expense  of  valuable  time  which  could  be  devoted  exclusively  to 
certain  classes  of  dealers  if  he  were  handling  a  combinatioo  of 
kindred  lines.  The  reason  for  the  sdecticm  of  these  diversifi^ 
Mnes  is  because  it  is  the  salesman's  own  "idea.**  Miaps,  if  left 
to  the  initiative  of  a  comlnnation  of  manufacturers  a  better  selec- 
tion may  be  made,  and  better  results  obtained  in  the  foreign  field. 

I    DISTANCES  TRAVELERS  SHOULD  KNOW  | 

A  Table  ^awmg  the  disioHees  from  New  York,  NemOrleans,  San 

Francisco  and  Port  Townsend  to  worlds  principal  ports  and  cities 
that  may  ^ve  a  salesman  atv  idea  of  distances  to  be  covered  in* 

traveling  in  foreign  countries. 

(Routes  by  water  in  nautical  miles ;  land  routes  in  statute  miles) 

FonuGif  Crm 

row  AND  SOUm  '^ew  New         San  Fort 

York.       Orleans.   Franciaco.  Townaend. 

Aden— Suez  Canal   6,532  7,870   

Cape  of  Good  Hope   10,986  11^08   

Suez  Canal  and  New  York    9,7^3  9^81 

C  of  Good  Hope  &  N.  Y.   14,176  14,18i 

Sues  and  Telniantq)ec  *    9,500  10,300 

Suez  and  Panama   10,800  11,600 

Suez  and  Magellan  Strait    15,900  16,700 

Singapore   U,aOO 

Singi^mre  &  P.  Towatend  14,499  Ujm, 


•••••  ••••• 


THE  TRAVEUNG  SALESMAN  OVERSEAS  63 


Fow  AMD  soum                   rS^  ^ 

York.       Orieans.  Fmnciaooi.  Townaend. 

^t^^^P   3,326  4^3   

New  York   9^069  9,067 

Panama   8.264  9,039 

Magellan  Strait   13^671  14,446 

Batavia  (Java)   7,300  7,600 

Panama   13,16/  13,6e6   

Suez  Canal   10.182    11  59» 

•  •                J-*-*^^  ••••••  •••••• 

Cape  of  Good  Hope   11,855  12,278   

Bombay— Suez  Canal   8,120  9,636   

Cape  of  Good  Hope   11,250  11,848   

Suez  and  New  York   11,311    11  319 

C.  of  Good  Hope  &  N.  Y   14^441  14^449 

Suez  and  Panama   13^13  jg^ggy 

C  of  G.  Hope  &  Panama    14,500  15,270 

Stfait   15^064  15,839 

Singapore   g,^^^ 

Singapore  &  P.  Townsend  12,771 

^                                                                                        *   |fw^^«r  •••••• 

Singapore  &  San  Frandaco  12,971  19,262   

Singapore  and  Panama. . .    14,837  14.236 
Buenos  Aires   5^68  6,318   

Magellan  Strait  

New  York   ,  ,,59 

BmaOm.   j  648 

New  York..    g^g^  ---^ 

Calcutta— Suez  CanaL   9.830  11.230 

Cape  of  Good  Hope   12,180  12^88   

Sues  and  New  York  

C.  of  Good  Hope  &  N.  Y. 

Singapore   


Direct 


13,021 

13,029 

•••••• 

•••••• 

16,371 

16^79 

8,990 

8,896 

12481 

11.462 

14,230 

13,694 

3,392 
9,603 

2,764 
10,142 

•••••• 

•••••• 

•••••• 

• 

4,012 

•••••• 

4,769 

•••••• 

6^18 

7,374 

JilL^   ^^fi^^  10,014 

  9,898-  10,676 

Magellan  Strait   ia.ik.i  <^ 

  10,464  11,229 


PORTING  TO  THE  WORLD 


PORT  AND  ROUTE.  ^'"^  ^ 


•  •  •  •  • 


•  ••••• 


•••••• 


•••••• 


(eastern  end  of  Pana- 
ma Canal)   1,981  1,380 

Canal  and  Panama.   4^090 

Copenhagen—Direct   3,852  5,448   

New  Yoric   7,043  7,061 

Panama   7,642  8,41/ 

Magellan  Strait   12,734  13,509 

Guam   5/)64  ^jm 

San  Francisco   8,846  7»636 

Fort  Towniend   8,107  7^87 

Hamburg   3,652  5,243   

New  York   6,843  6,861 

Pemambuco,  BrazU   3,896  3,969  

New  Yofk   8,887  8,895 

New  Orleans.;   6,451  6,948^ 

PtaMwna    6,530  7,305 

Magellan  Strait   9,439  10,214 

Port  Said,  Egypt   5422  6^   

New  York   8^1  8,887 

Ptoama    9,562  10,337 

Punta  Arenas  (Magellan  S.)     6,890     7,340  6,199  6,968 

Rio  de  Janeiro   4,778  6,218   

New  York   7^  7^ 

New  Orkaiis   7,700  8497 

Buuuna   7,678  8,458 

Magellan  Strait   8,339  9,114 

San  Francisco   3,191  2,482 

Panama   5,306  4,704 

Petiognd— Difect   4,638  BJM   

New  Yofk   7,823  7^29 

San  Juan,  P.  R   1,428  1,539   

New  York   4,619  4,627 

New  Orleans   4,021  4,618 

Panama    4,845  5,180 

Magelkn  Strait   12,199  18,974 

Shanghai   5,550  6,290 

San  Francisco   8,741  8,032 

Port  Townsend   8,489  8,269 

P^mana   10,856  lOJ^ 


•••••• 


•  •  •  •  • 


•  •  •  •  • 


THE  TRAVELING  SALESMAN  OVERSEAS  65 


fOlT  Am  EOUTB.  oSS-.  F^S^.  xJ^SLd 

Suez   12,360  13,760   

Cape  of  Good  Hope   14,593  14^   

Singapora   7,502  7,206 

San  Francisco   10,693  9,964   

Port  Townsend   10,405  10,185  

Suez   10,170  11,560  

Cape  of  Good  Hope   12,914  12,355   

HabMia   1,227  597   

New  Orleans   3^079  4,006 

Panama   4,337  5^12 

Havre    3,169  4,760     

New  York   6,880  6,368 

Hongkong   6,086  5,886 

Port  Townsend   9,085  8,865   

San  Francisco   9,277  8,668   

Ptoama   11,431  10^30   

Soei   11,810  12,892   

Cape  of  Good  Hope   13,590  13,863   

Magellan  Strait   16,86S'  17,318   

Honolulu....   2,097  2,870 

San  Francisco   5,288  4,579  

Port  Townsend   5,569  5,849   

^•oma   6,686  6,085   

MageMan  Strait   13,269  13,719   

Kingston,  Jamaica   1,473  1,166 

Kongo  River,  mouth  of   5,688  8,580        

New  Orleans   9,062  9,559 

New  York   8,853  8,859 

Liverpool   3,053  4,663   

^^^^  York  

^^"^"^a    8,088  8313 

Strait   13,503  14,276 

  3,233  4,507   

^  York   6  424      5  433 

5;"^";^    8,218  8,993 

Magellan  Strait   13^688  14,458 

Manikin — ^Honolulu  and  San 

Bmiaidkio  Strait   g  943     ^  ^13 

YolKAama    g  ^^^3 


m  EXPORTING  TO  THE  WORLD 


.  New  New     _  8m      _  lf9tt 

POST  AMD  Yoik. 


••••••  •••• 


•  •  •     •  •  •  • 


••••••  •••• 


•     •  • 


Yokohama  &  S.  Francisco  9,480  8,771 
Yokohama  &  P.  Townsend     9,192  8,972 

Panama  •  •  •    11,546  10,993 

Snef   Ilg656  l%jm 

Cape  of  Good  Hope   13,536  18,966 

Suez  and  New  York   14,74;  14,755 

C.  of  Good  Hope  &  N.  Y.   16.727  16.735 

Magellan  Strait                 16,786  17^46   

Marseilles                             3^76  5,866   

New  York   7,067  7,073 

Panama   8,332  9,107 

Magdlaa  Stiait   18,884  14,099 

Melbonme   7ft^  7*^11 

San  Francisco   10,231  9,522 

Panama   10,028  9,427 

Magdhn  Stiait   18^  13,143 

Suez  Canal   18,981  14,808 

Cape  of  Good  Hope   12,670  12,988 

Mexico  City,  land  and  water     2,399      1,172  2,142  2,917 

Mexico  City,  land  and  water     2,398     1,526  2,512  3,349 

Naples  4^78  8,868   

New  York   7,868  7,869 

Panama   4,704  5,479 

Nome,  Alaska   2,705  2,356 

San  Francisco   5,896  5,187 

Port  Townsend.   5,555  5,335 

Fraama   8,010  7,410 

MageUan  Strait   15^40  16,849 

Odessa,  via  Gibraltar   5,370  6,760 

Panama    (western   end  of 

Panama  Canal)   8,277  4,052 

FUiama  Canal  and  Cokin. .     8,088  1,487 

Yokohama  and  Puuuna. . .   18,104  18,508 

Yokxyhanm  ft  Tehauntepec   12,209  10,961 
Tehuantepec  —  western  end 

of  railroad   2^89  2,964 

Eastern  end  of  railroad. .  •     2,036  818   

Va4»iaiso   5,140  5,908 

San  Fnadaoo   8,881  7,i 


..... 


..... .  . 


....  . 


••••••  ••• 


......  ...... 

......  ...... 

......  ...... 


THE  TRAVELING  SALESMAN  OVERSEAS 


67 


PORT  AND  £OUT£. 

Panama  

Magellan  Strait  

Vladivostok   

San  Fraocisoo  

Port  Townwsend  

San  Francisco  and  Panama 

Magellan  Strait  

Wellington,  New  Zealand. . . 

San  Francisco  

Puiama  

Macidlan  Strait  


New 


Neir 


Port 


4,687 

8,460 


Cape  of  Good  Hope  

Yokohama  

Hoooltilo  

San  Francisco  

Port  Townsend  

Honolulu  and  Panama  

San  Francisco  and  Panama 

Magellan  Strait  

Sii^li^KMre  and  Suet  

Cape  of  Good  Hope  


7,897 
7,556 
10,001 
17,036 

9,100 
8,540 
11,500 
14,230 

13,710 


7,727 
7,439 

10,093 
9,869 
16,205 
13,040 


4,035 
8,733 


7,18'8 
7^ 
9,410 
17,445 

•  ••••• 

8,391 
7,939 
11,778 

15,620 

14,058 


7,018 
7,219 

9,492 
9,268 
16,614 
14,471 
15^ 


4,706 


5,909 


4,357 


6,415 


4,536  4,240 
5,500  5,770 


CBApm  VI 


CORRESPONDENCE  IN  EXPORT  TRADE 
Essentials  in  expoblt  correspono&ncei— Careful  translators 

NBCBSSARY— Same  language  differs  in  various  COUNTRIEa— 

Parcel  post  as  means  of  developing  busihess  through 

CORRESPONDEN  CE 

It  has  been  said  quite  often  that  it  is  impossible  to  build  up  an 
fOBpott  trade  purely  on  correspondence— that  the  logical  formula 
involves  the  dispatching  of  a  persona!  representative  to  the 
objective  market  as  well  as  the  probable  establishment  of  branch 
cAxs  or  the  appointment  of  resident  foreign  agents.  This  is 
partfy  true  only.  Successes  by  American  manufacturers  have 
been  made  in  foreign  fidds  through  the  exclusive  use  of  tfie 
mails.  Other  attempts  have  ended  in  sad  failures.  The  skillfnl 
and  competent  handling  of  correspondence  in  a  manner  con- 
sistent with  the  temperament  and  psychology  of  the  person  who 
is  to  receive  it  in  a  foreign  country  usually  determines  the  suc- 
cess that  a  manufacturer  will  achieve  in  foreign  trade  regardless 
whetfier  he  uses  the  mails  exclusively  to  build  up  his  trade  or 
whether  he  sends  personal  representatives  to  the  chosen  markets. 

Correspondence  plays  a  major  part  in  export  trade.  It  serves 
as  the  line  of  communication  between  the  source  of  supply  and 
thte  market.  Sometimes  it  serves  as  the  only  line  of  Gonununica- 
tion  throu^  which  buyer  and  sdler  may  get  together  for  the 
purpose  of  transacting  bunness.  For  nearly  forty  years  a 
marine  engine  manufacturer  in  Western  New  York  has  been 
engaged  in  shipping  his  products  to  customers  he  has  never 
known  or  seen  personally.  During  this  long  period  of  pioneer 
work  there  has  never  been  a  representative  of  this  corporation 
m  tins  foreign  sml.  It  was  unnecessary.  It  was  too  txpeaavft. 
Correspondence  during  all  these  years  has  been  sufHcient. 

A  Pennsylvania  representative  of  a  pumping  machinery  manu- 
facturer, a  pioneer  in  the  export  field,  for  nearly  half  a  century 
has  enjoyed  a  large  volume  of  business  from  foreign  custxMncts. 


08 


CORRESPONDENCE  IN  EXPORT  TItADE  59 


These  customers  have  never  seen  a  personal  representative  from 
this  house,  yet  they  are  satisfied. 

The  history  of  American  foreign  trade  is  replete  with  chapters 
of  successful  careers  in  exporting  throiigh  correspondence. 
With  the  betterment  of  the  means  of  communication  between 
the  principal  centers  of  the  world,  the  addition  of  mail  steamers 
that  ply  between  ports  on  regular  schedules,  and  the  improve- 
ment of  communication  m  sparsely  settled  r^ions,  the  hanHHng 
of  busmess  with  foreign  customers  throui^  correspcmdence  is 
becoming  less  difficult 

EssetUkds  in  Exfori 
Correspondence 

There  are  some  things  that  may  be  incorporated  in  a  letter  to 
a  domestic  customer  that  would  be  entirely  '  out  of  order"  in  a 
letter  to  a  foreigner  in  a  strange  country.  It  is  possible  and 
often  permissible  to  use  a  '*breeiy"  style  when  writing  to  a 
customer  in  Seattle.  It  may  be  good  business  to  pat  him  on  the 
back,  so  to  speak,  and  to  call  him  by  his  first  name,  and  to  say 
tiiat  he  has  certainly  "delivered  the  goods,"  and  won't  he  please 
try  to  deliver  another  "knockout"  the  commg  month,  etc  But 
this  will  never  do  in  f<mign  correspondence. 

The  tone  of  correspondence  intended  for  foreign  consump- 
tion must  be  regulated  to  fit  the  peculiarities  of  each  indi- 
vidual country.  If  it  has  lacked  dignity  in  the  domestic  field 
it  must  have  it  in  the  foreign  field.  If  it  has  been  slangy  at 
home  the  blue  pencil  must  delete  these  literary  characteristics 
peculiar  to  the  American  vocabulary.  If  the  sense  of  courtesy 
has  been  pigeonholed  it  must  be  brought  out  and  carefully  ap- 
plied to  foreign  correspondence.  Courtesy  is  an  essential  in 
letter  writing  to  foreign  coimtries.  Although  courtesy  is  inex- 
pensive it  is  invaluable.  The  letter  may  be  the  only  means  by 
which  a  manufacturer  can  be  introduced  to  a  customer  he  has 
never  seen.  If  the  letter  is  written  in  a  courteous,  dignified  and 
business-like  tone  it  will  impress  the  customer.  If  an  opposite, 
style  is  adopted  it  will  be  consigned  to  the  waste  basket 

A7>oid  Impertinences  in 
Foreign  Correspondence 


Foreign  bnsiaess  men  are  not  accustomed  to  giving  mfcnmft- 


eo  EXPORTING  TO  THE  WORLD 


tkm  about  thdr  business  as  in  the  United  States.  They  regard 

forms  and  other  blanks  in  which  questions  are  asked  regarding" 
business  standing,  credit  rating  and  other  details  as  reaching  the 
Ntii  power  of  impertiaence.  The  story  af  how  an  American 
house  "got  its  foot  into  it'*  several  years  ago  in  Ptaama  is  told 
by  Mr.  Gerrard  Harris,  a  special  agent  of  the  United  States 
Government  Department  of  Commerce,  in  one  of  the  dq;>art- 
menfs  export  trade  pnblicatioos.  - 

''Mort  l4itbi-Ame«H|||  do  iiol  at  all 
and  searching  questions  asked  by  some  hosuiess  hooie  m  an 
endeavor  to  obtain  credit  information,**  says  Mr.  Harris  in  tfie 
article.  "The  tropical  dealers  are  not  accustomed  to  these  ques- 
tions and  resent  them.  The  English  and  Germans  get  their  data 
on  business  houses  m  a  less  direct  manner.  An  incident  of  how 
tiie  'credit  Uank*  Is  usually  received  was  idated  to  me  by  a  busi- 
ness man  in  Panama.  There  caOed  upon  him  a  likable  young 
salesman  representing  a  concern  in  the  United  States.  The 
Panamanian  did  not  really  need  anything  in  his  line,  but  the  sales- 
man made  a  very  good  impression;  a  friendship  sprang  up,  and 
the  Panamanians  purely  out  of  personal  regard,  gave  him  an 
order  lor  $1S0  worth  of  goods^  intending  to  pay  cash  lor  tiien^ 
witiiin  thirty  da3rs.  He  promised  to  save  a  big  order  for  the 
salesman  on  the  next  trip.  The  latter  sent  the  order  in  and 
went  on  his  way  rejoicing.  Now,  that  firm  was  well  known  in 
business  in  P^uiama  for  many  years.  Dun  or  Bradstreet  could 
Instant^  have  given  its  ratmg,  and  it  la  a  good  one.  Any  bank 
In  P^mtona  would  have  said  ikat  firm  was  good  lor  $25,000,  ta 
say  nothing  of  the  $150.  Next  thing,  the  merchant  received  a 
long,  imposing  question  blank  asking  questions  concerning  his 
wealth,  whether  he  had  been  in  bankruptcy,  the  amount  of  his 
debts  and  to  whom,  the  volume  of  his  business,  his  profits,  reler* 
ences,  and  sio  lorth,  at  length.  He  wrathlulfy  wrote  on  tiie  blank 
that  he  considered  the  questions  impertinent,  offensive,  unneces- 
sary, and  a  reflection  upon  him.  Adding  a  fervent  request  that 
the  firm  keep  the  goods,  he  mailed  the  blank.  Upon  its  receipt 
tlie  house  did  some  hasty  investigating  and  shipped  the  goods. 
The  Panamanian  sent  New  Y<m4c  exdiange  lor  them  belore  he 
had  even  taken  them  out  ol  the  custom  house,  and  said  nodiing. 
In  the  course  of  time  Ac  young  salesman  came  back,  joyfully 
expecting  the  big  order.  The  merchant  greeted  him  cordially 
and  invited  him  into  a  big  $^000  touring  car.  Aa  th^  rode 


CORRESPONDENCE  IN  EXPORT  TRADE  «1 


about,  tfie  native  pointed  out  some  buildings.  'See  that  three- 
story  block  ?  It  is  mine.  And  that  apartment  house?  Mine  also. 
The  next  one  is  my  brother's;  he  is  my  partner.  Yonder  is 
another  bkxrk  we  own  jomtly.  I  am  director  in  that  bank.  I 
own  a  great  deal  ol  stock  in  that  bank  yonder/  The  auto  trip 
finished,  the  salesman  was  driven  to  his  hotel.  *I  just  wanted 
you  to  see  things  for  yourself,'  said  the  merchant,  and  then  with 
rising  indignation  told  how  the  house  represented  by  the  young 
man  had  doubted  hun  on  a  small  order  ol  $150.  'I  like  you  per- 
aonallly/  he  cootmued,  Iwt  there  wiU  be  no  big  order  for  you 
or  any  other  order  as  long  as  you  are  with  a  house  that  has  that 
style  of  business.  Always  come  and  see  me — ^personally — and 
if  you  get  a  better  house  I  will  give  you  business;  but  this  one, 
nothing  for  them.' " 

A  striking  examf^  ol  how  not  to  handle  loreign  correspond* 
enoe  is  given  in  the  foregoing  story. 

Tell  the  Whole  Story 

in  Foreign  Correspondgnce 

It  talm  a  letter  about  forty  days  to  travel  from  New  York  to 
Siam,  and  about  twenty-two  days  from  New  York  to  Valparaiso. 
Some  of  these  far-away  countries  have  as  yet  inadequate  steamer 
connections  with  other  parts  of  the  world.  Mail  does  not  arrive 
every  day.  Consequently,  the  arrival  ol  a  steamer  with  poudies 
full  of  nuul  is  the  occasion  of  an  unportant  event  in  many  foreign 
ports.  Several  weeks  usually  pass  before  the  foreign  merchant 
receives  his  business  correspondence.  When  he  does  get  it, 
he  expects  full  information,  if  it  is  a  letter  in  answer  to  an 
inquiry.  If  a  strange  American  manufacturer  is  submitting 
a  proposition  his  interest  in  it  vriU  depend  on  the  care  with 
which  the  correspondent  prqiared  the  communication.  Has  the 
letter  es^ilamed  everythmg  accurately?  Has  it  been  thorough 
m  Its  descriptk»?  If  the  foreign  customer  is  interested  must  he 
write  for  further  information,  which  will  mean  another  month 
or  two  of  delay?  Has  it  the  air  of  courtesy? 

These  are  some  ol  the  questkms  tiie  correi^KMidence  depart- 
nsfiiit  ol  the  American  firm  must  answer  before  dropping  the 
fetter  m  the  mail  box.  In  writing  a  letter  to  a  foreign  customer 
the  manufacturer  should  endeavor  to  see  things  from  the  other 
fellow's  viewpoint  He  should  assume  that  the  customer  knows 


EXPORTING  TO  THE  WORLD 


nothing  of  his  product,  nothh^  of  the  way  In  which  it  is  made, 
nothing  of  the  business  practices  of  the  house,  nothing  of  his  usual 
of  sale,  and  nothing  of  the  manufacturer  himself.  Once 
acquirfaif  this  mental  attitude  he  is  then  prepared  to  write  a 
letter  couched  in  pkin  words,  in  a  dignified  and  courteous  tone, 
and  giving  full  information  so  as  to  enable  the  foreigner  to 
understand  the  proposition  thoroughly  without  the  necessity  of 
furdier  coffttspopdenoc, 

Letter  Should  Be  in 
Umguage  of  Customer 

Out  of  pore  courtesy,  if  nothing  else,  the  language  of  the 
person  whTsends  an  inquiry  from  a  foreign  counuy  to  an 
American  firm  should  be  employed  in  the  answer.  There  are 
times,  however,  when  the  use  of  any  one  of  the  fmnapd  c^«^ 
dal  languages  of  the  world,  such  as  English,  Spanish,  German 
or  Frendi,  may  be  made.  In  all  the  principal  commercial  centers 
tiim  may  be  found  big  business  men  engaged  in  the  importing 
business.  These  men,  thfough  years  of  travel  in  foreign  coun- 
tries  have  acquired  a  knowledge  of  one  or  two  foreign  tongues. 
In  writing  to  some  of  these  big  houses  the  letters  may  be  wntttti 
in  English.  When  the  correspondence  involves  a  large  chentele 
and  territory,  however,  good  business  practice  commands  that 
tiie  ietlert  should  be  written  in  the  language  of  the  country  for 
idudi  they  are  bound. 

Pmnptness  in  Answering 
ImqmkM  Necessary 

It  should  be  Oie  rule  of  every  American  manufacturer  to 
answer  all  communica^ons  in  which  hiquiries  are  made  by  fw- 
cign  writers.  Sometimes  their  seeming  unimportance  causes  the 
manufacturer  to  huri  them  into  the  waste  basket.  It  is  difficult 
to  measure  the  importance  of  a  communication  by  the  character 
of  the  letterhead.  A  coanannication  from  the  interior  of  Peru, 
although  written  on  dio^  slatioiiery,  may  be  from  a  fanner  who 
wants  to  buy  machinery  or  from  a  priest  who  needs  material 
for  a  new  church.  There  should  be  no  delay  in  answering  these 
letters.  There  has  been  considerable  complaint  in  late  years 
against  Ametican  houses  that  have  failed  to  respond  to  letters 


CORRESPONDENCE  IN  EXPORT  TRADE  63 


of  tiM|uify.  Complaints  also  arise  from  the  failure  of  American 
manufacttirers  to  promptly  confirm  transactions  which  have  been 
closed  by  cable.   This  may  leave  the  customer  or  agent  at  the 

other  end  in  doubt  as  to  whether  the  transaction  is  clearly  under- 
stood. American  manufacturers  should  confirm  by  letter  all 
cables  sent  or  received  on  the  date  on  whidi  they  are  sent  or 
received  in  order  that  any  misunderstanding  arising  from  the 
use  of  a  code  may  be  corrected  without  delay.  Too  often  manu- 
facturers neglect  to  comply  with  requests  from  foreign  corre- 
^ndents  for  information  accompanied  with  specific  instructions 
as  to  how  that  information  is  to  be  given.  An  American  consul 
in  Italy  writes  that  Italian  merchants  are  very  much  disappointed 
at  the  failure  of  American  firms  to  follow  instructions,  and  have 
refused  to  make  connections.  The  consul  writes:  "In  nearly 
every  case  where  the  inquirer  has  been  approached  for  his 
reasons  in  not  making  direct  comiecti<ms  with  American  houses 
from  which  he  has  received  quotations  the  blame  has  been  placed 
on  the  American  correspondents  who  have  not  complied  with  the 
requirements  as  to  the  use  of  the  Italian  language  and  of  the 
metric  system.  ...  It  should  be  explained  that  local  inquirers 
have  excellent  reasons  for  requesting  correqxmdents  to  comply 
with  these  indispeittable  features.  In  most  cases  the  business  is 
conducted  by  one  man  who  maintains  an  extremely  small  stafT, 
and  consequently  he  has  neither  tfie  time  nor  the  inclination  to 
have  letters  translated  and  the  terms  and  measures  converted  into 
the  system  with  which  he  is  familiar." 

Value  of  Signature  im 
Foreign  Correspondence 

A  typewritten  signature  attached  to  a  circular  letter  is  bad 
form.  It  is  bad  form  anywhere.  Sometimes  even  a  rubber 
stamp  signature  is  resented.  The  American  consul  at  Hankow, 
China^  writes  as  follows:  "The  Hankow  consulate  would  like 
to  draw  the  attention  of  American  firms  attempting  to  enter  the 
foreign  trade  to  the  practice  on  the  part  of  some  of  them  in 
communicating  with  foreign  concerns  of  sending  out  tiade  lettm 
with  no  written  signature,  but  with  only  a  typewritten  signature 
usuaUy  the  name  of  the  firm  akme.  This  is  almost  invariably 
construed  by  fordgn  merchants  as  an  indication  that  the  Ameri- 
can house  which  does  it  lacks  any  real  interest  in  the  possible  sale 


U  EXPORTING  TO  THE  WORLD 


of  its  goods  abroad.  The  result  of  this  policy  is  well  illustrated 
by  a  remark  made  to  the  writer  by  the  local  manager  of  a  foreign 
6mL  His  sutement  was  to  the  effect  that  whea  he  receives  a 


ciently  interested  in  the  marketing  of  his  goods  to  sign  his  letter, 
he  always  gives  such  communication  the  courtesy  of  a  reply, 
while  if  he  notices  that  no  signattire  is  affixed  to  the  letter  it  is 
proaafiUty  coosifned  to  the  waste  basket" 

American  firms  should  bear  in  mind  the  attitude  of  this  foreign 
merchant,  as  his  attitude  reflects  the  frame  of  mind  of  business 
men  in  c»ther  lands  as  wdl,  ieq)ecting  a  typewritten  signature. 


a^fgmty  of  Knowledge  of 

Language  of  Foreign  Customers 

Before  communicating  with  a  customer  in  a  foreign  countr>' 
the  manufacturer  should  be  sure  that  he  is  employing  the  proper 
language.  The  merchants  of  Braal  resent  letters  received  in 
Spainish,  even  though  the  country  is  in  what  is  commonly  known 
as  "La tin- America."  Brazil  was  once  a  Portuguese  colony  and 
the  country  was  inhabited  by  people  of  Portuguese  origin.  One 
may  suspect  that  Jamaica  is  a  Spanish-speaking  island  because 
of  its  geogn^^iical  position.  Jamaica  is  a  British  ookMBj,  and 
tile  inhafaitu^  speak  Eogfish.  The  three  Guianas— British, 
French  and  Dutch— contain  populations  speaking  the  language 
of  the  countries  that  control  them.  A  young  American,  a  few 
years  ago,  started  to  study  Spanish  in  anticipating  a  trip  he  was 
prq»ring  to  take  to  Haiti.  However,  before  he  arrived  there  he 
learned  that  his  awkward  ^MUiish  woold  be  needless  in  a  country 
wkut  the  native  population  had  been  brou|^t  up  on  French. 
Firms  should  lirst  learn  what  language  is  used  in  the  foreign 
country  to  which  their  letters  are  to  be  sent  It  may  save  them 
considerable  embarrassment. 


Tramdetikms  SkaM 
Be  CeirifnUy  Mods 


There  is  more  difficulty  among  American  manufacturers  in 
obtaining  proper  translations  of  letters  than  any  other  service  in 
connection  with  their  export  problems.  Empk^yers  eacperience 
Side  (fifficol^  in  ohtainwy  any  number  of  competent  oOee  daks 


CORRESPONDENCE  IN  EXPORT  TRADE  66 


to  handle  the  routine  of  the  business,  but  when  it  .  comes  to  finding 
competent  translators  who  should  correctly  interpret  English  com- 
munications so  that  diey  may  be  intelligently  transkted  into  die 
required  foreign  language,  these  employers  are  hard  pressed. 
The  following  classes  of  translators  usually  apply  for  positions : 

(a)  Americans  who  have  learned  a  foreign  language  in  the 
schools  of  dus  country,  or  duough  some  popularly  advertised 
method. 

(b)  Americans  who  have  learned  a  foreign  language  in  a  for- 
dgn  country,  and  who  are  able  to  read,  speak  or  write  it. 

(c)  Foreigners  ndio  have  a  good  knowledge  ol  Engli^  as  well 
as  a  thorough  knowledge  of  thor  own  language. 

(d)  Foreigners  whose  knowledge  of  English  is  limited,  al- 
though having  a  thorough  knowledge  of  their  own  language. 

(e)  Americans  of  foreign  descent  who  have  r^^ained  a  good 
knowledge  of  die  language  of  thdr  parents. 

Of  these  five  classes  perhaps  the  best  qualified  are  those  faffing 
in  classes  b,  c  and  e.  Those  coming  in  class  a  should  never  be 
considered*  "Canned"  translations  only  would  result  from  the 
efforts  of  this  dass.  It  is  possible  that  the  best  results  may  be 
obtained  from  class  c.  Having  a  practical  knowledge  of  English 
the  translator  falling  under  class  c  is  well  equipped  to  "get  the 
idea"  behind  a  letter,  and  with  his  skill  in  the  foreign  language 
necessary  he  can  use  his  own  words  and  i^omatic  eaqpresdons 
and  yet  retain  the  original  meaning  of  the  communication.  A 
professional  translator  has  this  to  say  about  the  technique  of 
interpieting  Kpg^iffl*  into  a  foreign  tongue:  ''In  order  to  be  a 
competent  translator  of  American  bunness  literature  a  translatior 
must  not  only  be  perfectly  familiar  widi  English  and  equally 
familiar  with  the  language  into  which  he  is  to  translate,  but  he 
must  also  be  able  to  grasp  the  full  meaning  of  the  original 
matter,  no  matter  how  technical  it  may  be.  In  most  instances 
sttcii  work  is  eitremdy  difficult  and  requires  a  high  degree  of 
education  and  intdligence  as  well  as  linguistic  ability/' 

The  same  writer  goes  on  to  say :  "In  the  course  of  my  experi- 
ence, in  translating  and  in  observing  the  work  of  other  trans- 
lators, I  have  fotmd  that  the  production  of  a  translation  which 
reads  escacdy  like  the  original  copy,  and  yet  conveys  the  fmdse 
meaning  to  a  foreigner,  is  a  feat  seldom  achieved.  The  most 
successful  translations^  in  fact,  convey  the  spirit  rather  than  the 


66  EXPORTING  TO  THE  WORLD 

language  of  the  original^  while  the  literal  translation  it  generally 
a  complete  failure." 

Smme  Language  Difers 
m  Many  Cotmiries 

The  greatest  care  should  be  taken  in  translating  a  letter  into  a 
language  that  is  used  in  several  different  countries.  We  know 
tiiat  the  English  as  spoken  in  London  and  the  English  as  wpckea 

in  New  York  is  quite  distinct.  The  same  is  true  of  Pof^ 
tuguese  as  spoken  in  Portugal  and  that  spoken  in  Brazil.  The 
Spanish  of  Mexico  differs  from  the  Spanish  of  Chile  and  Argp^i- 
tina,  and  the  Spanish  of  Peru  and  Paraguay  dflhli  from  tiie 
Spanish  of  Ecuador  and  Cuba.  These  countries  have  their 
own  idiomatic  expressions  and  colloquialisms,  and  only  a  very 
skillful  translator  is  able  to  prepare  Spanish  copy  that  is  com-> 
pietdy  understood  in  all  of  those  countries  where  Spanish  is  the 
native  tongue.  Certain  American  publications  have  attempted 
to  solve  this  problem  by  having  their  articles  translated  into  pure 
Castilian.  While  this  plan  seems  to  have  the  approval  of  many 
authorities  on  the  subject,  yet  it  is  admitted  that  considerable 
difficulty  is  often  e3q>erienced  in  translating  certain  technical 
eaqnesnons  into  Castilian  so  that  tiiqr  can  be  readily  understood 
in  Latin-American  countries. 

The  difficulty  of  translating  technical  matter  into  a  foreign 
language  is  ably  explained  by  Mr.  Maximilian  Aviles,  export 
manager  of  the  American  Sawmill  Machinery  Company,  in  a 
brodiure  entitled  'Translating  as  a  Factor  in  Export  Trade.'' 
"Irrespective  of  the  nature  of  tiie  matter  to  be  translated/'  says 
Mr.  Aviks,  "whether  it  be  medumical,  legal,  literary  or  simf^ 
commercial  correspondence,  the  purpose  of  a  translation  is  (1) 
fully  and  clearly  convey  the  ideas  expressed  in  the  original, 

(2)  to  find  the  exact  equivalent  of  words  and  phrases,  and 

(3)  to  render  the  whole  into  idiomatic  language  as  pure  and 
spontaneous  as  the  original  composidon.  Any  translatioa  thai 
fails  to  meet  these  requirements  is  defective.  If  it  conveys  an 
opposite  idea,  an  erroneous  or  different  impression,  it  is  obvious 
what  the  consequences  will  be.  If  the  proper  equivalents  in 
current  use  are  not  found  for  technical  words,  or  exact  defioi- 
tioot  of  the  same  are  not  given,  tiie  translation  will  not  be  under- 
stood hf  the  reader  or  will  carry  no  force.  And,  assummg  that 


CORRESPONDENCE  IN  EXPORT  TRADE  67 


these  two  requirements  have  been  faithfully  complied  with,  if 

the  third  should  be  ignored  and  the  translation  be  made  in  a  style 
entirely  foreign  to  the  character  of  the  language,  it  will  then  be 
ineffective*  perhaps  ridiculous;  sentences  and  paragraphs  wiU 
stiggest  die  hidicrous  instead  of  explaining  or  oonvindng." 

Useful  Suggestions  in 
Foreign  Correspondence 

The  export  manager  should  always  be  given  a  cc^  of  all  com- 
munications having  to  do  with  export  trade.   If  it  is  the  system 

of  the  firm  to  have  all  original  letters  go  direct  to  the  executive's 
office  the  export  manager  should  be  suppUed  with  a  memorandum 
of  the  contents. 

Sometimes  mail  bags  are  lost  in  shipwrecks  or  other  unavoid- 
able disasters,  and  important  letters  never  reach  their  destination. 
In  order  to  avoid  loss,  copies  of  the  original  letters  should  follow 
on  the  next  steamer.  By  following  this  plan  many  American 
firms  saved  themselves  and  overseas  customers  considerable  trou- 
ble during  the  height  of  the  German  submarine  attacks  in  the 
(keat  War. 

The  envelope  in  which  a  letter  arrives  from  a  foreign  country 
should  not  be  thrown  away  until  the  location  of  the  city  from 
•whence  it  came  is  fully  ascertained.  This  is  necessary  because 
there  are  so  many  cities  in  different  countries  of  the  same  name, 
and  mistakes  are  likely  to  occur.  The  writer  sddom  specifies 
the  country  from  which  the  letter  originated. 

American  consuls  often  complain  that  American  business  men 
fail  to  place  proper  postage  on  outgoing  mail.  This  not  only 
causes  delay  but  also  expense  to  foreign  customers  whose  heavy 
mail  from  this  country  may  make  the  bill  for  underpaid  postage 
quite  large  at  the  end  of  the  mondi.  The  Offidal  Postal  Gi^, 
which  contains  all  necessary  information  regarding  postal  rates 
to  foreign  countries,  should  be  in  the  library  of  every  American 
exporter. 

To  insure  pronqtt  and  safe  transmission  to  destination  of  arti- 
cles addressed  to  foreign  countries,  senders  should  (1)  make  tiie 
address  legible  and  complete,  giving  the  name  of  the  country, 

that  of  the  town  or  post  office,  and  in  cases  of  cities  or  towns 
the  street  and  house  number  should  be  indicated.  (2)  Flimsy 
paper  for  envdopes  should  be  avoided  as  tliqr  are  liable  to  be 


68  EXPORTING  TO  THE  WORLD 


tom  or  destroyed  in  tiie  Vmg  transits.   (3)  The  use  of  sesfing 

wax  for  the  covers  should  be  avoided,  as  letters  so  sealed  often 
adhere  to  each  other,  and  the  addresses  of  some  of  the  articles 
are  destxoved  bv  the  tearliiff  of  the  coyeiB  in  tbe  attemot  to 
ffparate  tibe  articles. 

Selection  of  Stationery  >  V:* 

for  Export  Correspondence 

American  business  farms  are  known  the  world  over  for  the 
quality  of  their  stationery.  Nothing  impresses  a  foreign  cus- 
tomer more  than  the  exercise  of  good  taste  in  the  selection  of 

stationery,  and  in  the  simple  and  dignified  style  in  which  it  is 
printed.  The  use  of  glaring  letterheads  may  prove  offensive  to 
the  foreign  eye.  The  same  letterhead  used  in  domestic  corre- 
qioodence  with  a  line  indicating  its  origin  in  tiie  export  d^Mut- 
mcttt  wbm  corresponding  with  foreign  cnstomers  has  loand 
much  favor  with  many  American  exporters. 

Export  Department  Should 
Heme  Good  MedUmg  Usi 

Every  export  department  should  have  an  up-to-the-minute 
mailing  list  of  foreign  prospects.  A  world  trade  directory  pub- 
lished in  London  is  in  general  use  in  this  country.  The  United 
States  Department  of  Commerce  has  from  time  to  time  printed 
directories  listing  merdiants  and  importers  of  other  countries^ 
tnit  tiiese  directories  hiave  not  been  kept  up  to  date,  and  havo 
decreased  in  value.  In  many  countries  reliable  concerns  have 
imdertaken  the  task  of  compiling  directories  covering  the  busi- 
ness of  the  entire  country.  The  names  of  these  concerns  may 
be  obtained  from  the  consuls  rq»resenting  foreign  coontriet  In 
die  United  States.  The  telephone  directories  issued  in  many 
cities  may,  also,  prove  of  value  if  renewed  r^^larly.  Another 
source  of  information  that  has  been  entirely  overlooked  by  many 
American  manufacturers  is  the  foreign  press.  In  every  large 
dty  of  consequence^  there  may  be  found  a  newspaper  that  prints 
tfie  news  of  the  entire  country,  inrhiding  a  ciotiMnerrial  sorv^ 
that  shooM  prove  of  value.  The  advertisements  in  these  news^ 
papers  often  furnish  a  clue  that  may  lead  to  business  relations 
between  advertiser  and  manufacturer.   The  successful  export 


CORRESPONDENCE  IN  EXPORT  TR^B*  «9 


manager  will  keep  on  file  the  leading  newspapers  of  the  country 
in  wluch  his  firm  is  doing  business. 

The  Pare^  Post  os  Meemt 
of  Developing  Foreign  Trade 

The  parcel  post  is  one  of  the  most  valuable  mediums  through 
which  international  trade  may  be  developed.  An  instance  of  the 
possilMlities  of  devek)ping  foreign  trade  through  the  parcel  post 
is  suggested  in  the  statistics  for  1913,  showing  that  the  Rq;mblic 
of  Chile  alone  imported  by  this  method  from  the  ootnde  worid 
merchandise  valued  at  $1,982,431,  the  share  from  the  United 
States  being  only  $49,404.  Moreover,  by  using  the  parcel  post 
foreign  merchants  are  able  to  effect  deliveries  much  more 
prompt  than  throng  the  ordinaiy  freight  channels. 

The  advantages  of  shipping  articles  by  parcel  post  He  princi- 
pally in  the  economy  involved.  Packages  up  to  eleven  pounds  in 
weight  may  be  shipped  to  all  the  principal  countries  of  the  world 
at  a  nominal  charge.  The  Official  Postal  Guide  should  be  con- 
sulted for  rates,  r^;uhitions  and  methods  of  pacldog  for  pared 
post  deliveries. 

While  the  principal  markets  of  the  world  can  be  reached  by 
parcel  post  from  this  country  and  further  extensions  are  being 
contemplated,  it  will  be  necessary,  however,  to  readjust  certain 
parcel  post  agreements  existing  between  the  United  States  and 
Great  Britam  before  a  smoodi  intetcourae  tfuoogh  tiie  mails  can 
be  inaugurated. 

United  States  at 

a  Disadvantage  ^ 

The  late  Maynard  D.  Howells,  Export  Manager,  Montgomery 
Ward  &  Co.,  of  Chicago,  in  a  recent  parcel  post  conference  at 
Washington,  D.  C,  submitted  the  following  in  the  form  of  a 
memorandum  iHikfa  was  distributed  to  the  delates  present: 

"A  study  of  the  British  Postal  Guide  shows  Aat  Ei^;laiui  fists 
195  countries,  colonies,  or  other  overseas  nations  or  groups,  as 
open  to  her  exporters  for  shipment  by  parcel  post.  The  United 
iStattf  lists  86  such  countries  and  groups,  so  that  for  purposes  of 
conqMrison  tiie  eqporler  of  England  can  ship  his  wares  1^  pared 
post  to  109  moie  countries  of  the  eardi  dian  can  tihe  American 
exporter. 


70  EXPORTING  TO  THE  WORLD 


"Nor  is  this  aU.  By  reason  of  her  parcel  post  with  the  United 
States,  withont  any  further  actum,  England's  eiqwrteni  can  and 
may  ship  to  all  of  our  outlying  possessions,  that  is  to  say, 
IVHto  Rico,  Canal  Zone,  Hawaii,  PhiUppine  Islands,  Alaska,  etc., 
while  on  the  other  hand  our  post  office  department  has  only 
opened  to  us  such  British  colonies  as  have  entered  into  specific 
pared  post  treaties  with  tts.  H  England,  by  virtue  of  her  treaty 
with  us,  is  entitled  to  all  rights  and  privil^res  of  dealii^  wiA 
our  possessions  and  colonies,  why  should  we  not  also,  by  virtue 
of  our  pared  post  treaty  with  Great  Britain,  have  access  to  aU 
of  her  colonies  as  well? 

"But,  to  my  mind,  the  most  inconsistent  and  indefensible  in- 
equality in  the  arrangement  is  the  situation  hy  which  those 
British  colonies  which  have  no  parcel  post  wiA  this  country, 
and  to  which  our  government  has  provided  no  way  for  our  send- 
ing parceb  throc^  the  mails  from  America,  may  yet,  on  the 
other  hand,  send  thdr  parcels  to  the  United  States  tiirongh  the 
EngUsh  post.  Thus  a  merchant  in  Nigeria  can  send  his  produce, 
if  he  so  wishes,  to  New  York,  by  pared  post,  but  a  New  York 
merchant  may  not  send  parcds  to  Nigeria  by  pared  post  We 
have  a  parcel  post  between  this  country  and  England,  and  Eng- 
land has  a  parcel  post  with  Nigeria.  She,  therefore,  takes  the 
conunon-sense  mw  that  so  far  as  the  conveyance  of  parcels  from 
Nigeria  to  the  United  States  is  concerned,  she  will  bring  them 
in  her  own  maib  without  any  special  treaty ;  but  we,  because  we 
ham  no  special  treaty  with  Nigeria,  have  not  even  provided  a 
reciprocal  arrangement  whereby  the  British  mails  in  London  will 
accept  our  parcels  from  our  own  mails.  We  must  employ  an 
agent  in  London,  pay  the  postage  from  America  to  London  and 
British  postage  from  London  to  Nigeria.** 
I  Thus,  it  will  be  seen  that  there  are  still  some  difficulties  in 
coimection  with  exportii^  by  pared  post  which  the  government 
alone  can  remove.  However,  the  fact  that  the  postal  authorities 
arc  bfndi«g  every  effort  to  extend  the  pared  post  to  different 
countries  is  encouragii^.  Amngements  have  already  been  made 
with  France  and  England  to  fadlitate  the  despatch  of  packages 
from  the  United  States  to  colwiies  belonging  to  those  countries. 


CORRESPONDENCE  IN  EXPORT  TRADE  71 


Counirks  with  which  the  United  States  has  Pared  Post  agrees 

ments 


♦Alsace  and  Lorraine 

♦Algeria 

♦Argentine 

♦Australia,  induding  Tasma- 
nia, Norfolk  Island,  and 
Papua  (British  New  Gui- 
ana) 

Azores 

Bahamas 

^Barbados 

♦Basutoland 

Belgium 

♦Benadir 

Bermuda 

Bolivia 

Brazil 

British  Guiana 
♦British  India 
♦Carpathos 

Chile 

China,  including  Manchuria 
Imt  not  the  province  of 

Mongolia 
Colombia  (a) 
♦Cook  Islands 
♦Corsica 
Costa  Rica  (a) 
♦Crete 

♦Curacao  (including  Aruba, 
Bonaire,  Saba,  St  Eusta- 
tius,  and  Dutch  part  of  St 
Martins) 

Denmark  (including  the  Fa- 
roe Islands  and  Iceland) 

Dominican  Republic 

♦Dutch  Guiana 

Ecuador  (a) 


♦Egypt  (including  the  Sudan) 

♦Erithrea 

Faroe  Islands 

♦France    (including  Alsace 

and  Lorraine,  Algeria  and 

Corsica,  and  Tunis) 
*  French  Guiana 
♦Gibraltar 

Great  Britain  and  Ireland 

♦Greece 
Guatemala  (a) 

♦Guadeloupe  (including  Ma- 
rie Galante,  Deseade,  Les 

Saints,  St.  Bartholomew, 
and  French  portion  of  St 
Martins) 

Haiti 

Honduras 

Hong-Kong 

Iceland  (see  also  Denmark) 
♦Italy  (induding  R^mhlic  of 
San  Marino,  the  Italian  colo- 
nies of  Benadir  and  Erithrea ; 
the  Italian  post  offices  of 
Bengazi,  Libya,  and  Tripoli- 
in-Barbary;  and  the  islands 
of  Carpathos  and  Rhodes) 
Jamaica  (including  the  Turks, 
Caices,  and  Cayman  Isl- 
ands) 

Japan  (including  Formosa, 
Karafuto,  Japanese  Sagha- 
lien  and  Korea) 

Labrador 

Leeward  Islands  (Antigua 
with  Barbuda  and  Redon- 
da,  St  Kitts,  Nevis  with 


n  EXPORTING  TO  THE  WORLD 


ComUrkM  wUk  which  the  United  States  has  Parcel  Post  agreements 

Anguilla,  Dominica,  Mont-  Portugal  (including  the 
serrat,  and  the  Virgin  Isl-    Azores  and  Madeira  Isl- 
and (British)  ands) 
Liberia  *Rhodes 
Laxemtxniig  Salvador  (El) 
Madeira  Islanda  ♦Samoa  (British) 

*  Martinique  *Siam 
♦Mesopotamia  *Society  Islands 
Mexico  (a)  *Swaziland 
^Netherlands  Sweden 

♦Netherlands,  East  Indies  Trinidad  (including  Tobago) 

Newfoundland  ♦Union  of  Sooth  Africa  (Cape, 

New  Zealand  (including  Cook  Natal,  Orange,  and  Thms- 

and  Fanning  Islands)  vaal),  Swaziland,  and  Basu- 

Nicaragua  toland) 

♦Norfolk  Island  ♦Umguaj 

NorwAjT'  Veneniefai 

♦Palestine  VHndward  Islands  (Grenada* 

Panama  St.   Vincent,   the  Grena- 
♦Papua  (British  New  Guiana)     dines,  and  St  Lucia) 
♦Paraguay 
Pent  (a) 

(a)  "Specially  addressed"  parcels  are  di^tched  from  San 
Francisco 

♦  Parcels  cannot  be  rc^stered 


JHskmce  a  kUer  km  fa  travel,  amd  ^ime  U  takes  to  reach 
destinaiian^  from  New  York  City 


Aleacandria,  via  London                          6A50  Ut 

Amsterdam,  via  London                         3,987  8 

Antwerp,  via  London                                4,000  8^ 

Athens,  via  London                                 5,655  11 

Bahia,  Brazil.                                         5,870  14 

Bans^,  Siam  via  San  Francisco             12,900  43 

Bani^rok,  Sedan  via  London  1342f5  41 

Batavia,  Java,  via  London                       18,800  8i 

Berlin                                                  4,885  8 

Bombay,  via  London                             9,765  22 


r 


CORRESPONDENCE  IN  EXPORT  TRADE  73 


Distance  a  letter  has  to  travel^  and  time  it  takes  to  reach  destines 

tion,  from  New  York  City 

{Continued) 


Idiles. 

Days. 

8 

24 

24 

25 

  5,810 

11 

9 

8 

7 

11-3 

9 

Hamburg,  via  London  

9 

3 

27 

12 

7 

7 

Madrid,  via  London  

9 

Manila,  via  San  Francisco  

81 

Melbourne,  via  San  Frandsoo  

27 

3 

Panama  

6 

Paris  

8 

9 

17 

8 

8 

San  Juan,  Porto  Rico.  

6 

25 

Stockholm,  via  London.......  

10 

Sydney,  via  San  Frandsoo  

26 

22 

8 

Yokoihania,  via  San  Francisco  

80 

Chapter  VII 


ADVERTISING  IN  EXPORT  TRADE 

NECESsnY  or  American  advertising  in  foreign  fields — Ad- 
vertising MEDIA  AT  HOME  AND  ABROAD— COPY  FOR  FOREIGN  COUN- 
TRI£Sr— ThK  export  CATALOGUES — ^HOW  CATALOGUES  SHOULD  BB 
ItlPAlB>  AMD  DI8TRIBUTED— DumS  ON  CATALOGUES 

Advertising  is  largely  an  American  idea.  Here  in  this  country 
we  have  developed  it,  enlarged  its  sphere,  sifted  the  good  from 
the  bftd  and,  finally,  reduced  it  to  a  science  which  has  taken  its 
pkce  in  American  industry  as  a  vital  factor  in  merchandising 
progress.  It  is  true  that  the  printed  word  is  in  use  in  other 
countries  for  the  purposes  of  advertising,  but  nowhere  on  earth 
lias  so  nmdi  attention  and  dose  study  been  given  to  advertisbig 
as  here  m  the  United  States.  The  truth  of  this  statement  can 
readily  be  grasped  by  an  investigation  of  foreign  advertising 
methods.  It  is  the  consensus  of  opinion  of  American  authorities 
on  advertising  who  have  returned  from  foreign  countries  after 
attended  surveys  m  various  countries  that,  compared  to  Ameri- 
can methods,  the  science  of  publicity  abroad  is  yet  in  a  primitive 
condition.  No  concentrated  thought  has  ever  been  given  to  it 
It  is  uncnganised.  ' 

The  time  has  now  come  when  American  adverting  methods 
must  extend  to  the  entire  world.  We  must,  in  our  own  original 
way,  with  certain  necessary  readjustments,  send  the  message  to 
the  four  comers  of  the  globe.  Just  as  we  have  intensely  devel- 
oped the  domestic  market  by  enHstii^  tiie  power  of  the  printed 
word,  we  must  methodically  and  intelligently  bring  our  knowledge 
of  advertising  into  play  in  the  foreign  field.  We  must  first  study 
our  markets.  We  must  investigate  all  channels  through  which  the 
message  is  to  be  sent  We  must  know  where  those  dumnels  lead 
to;  and  when  they  get  there,  we  must  know  the  extent  to  which 
they  are  capable  of  spreading  the  story.  To  obtain  this  data  is 
more  difficult  than  at  home,  and  of  necessi^,  therefore,  the  maau- 

74 


ADVERTISING  IN  EXPORT  TRADE  75 


facturer  who  desires  to  advertise  in  the  foreign  field  must  proceed 
with  caution.  The  fact  that  he  is  going  out  of  his  own  territory 
to  advertise  should  not  tempt  hun  to  thmw  aside  all  the  points 
he  has  learned  at  home.  This  has  been  the  experience  of  many 
American  merchants  who  believed  that  "any  kind  of  advertising 
would  do  in  overseas  trade." 

Advertising  Media 
in  Foreign  Trade 

Before  laying  out  an  advertising  policy  for  foreign  countries 
the  manufacturer  must  first  analyze  his  market  Once  satisfied 
that  there  is  a  market  for  his  wares  in  a  chosen  field,  he  must 
then  proceed  with  the  development  of  his  selling  plan.  Regard- 
less of  the  kind  of  selling  plan  he  decides  to  adopt  there  is  going 
to  be  a  certain  amount  of  advertisiqg  required.  In  order  to 
properly  plan  and  execute  an  advertising  campaign  he  must  have 
a  knowledge  of  the  toots  wiA  which  he  is  to  work.  "What 
mediums  can  I  use  to  successfully  advertise  my  goods  ?"  he  in- 
quires. "Shall  I  use  newspapers?  Shall  I  use  magazines?  Shall 
I  use  billboards  or  motion  pictures?"  These  are  only  a  few  of 
the  questions  that  may  occur  to  the  metdunt 

For  the  purpose  of  analysis  the  essential  media  will  be  listed 
as  foOows:  (a)  The  trade  journals,  or,  as  commonly  known,  the 
American  export  journals;  (b)  the  foreign  local  daily  press; 
(c)  the  foreign  local  periodical  journals;  (d)  the  catalogue;' 
(e)  the  billboards;  (f)  the  motion  picture;  (g)  misoellaneous 
media. 

The  Trade  Journals 

as  Advertising  Media 

There  are  different  typta  of  trade  journals  avaihd^.  There 
are  trvie  joomab  that  are  fuinted  m  a  foreign  language  and  cir- 
cnlate  exdusivdy  m  foreign  countries.  Then  there  are  those  that 
circulate  exclusively  in  this  country  and  claim  as  their  subscribers 
and  advertisers  shipping  men,  freight  brokers,  bankers,  import- 
ers and  exporters,  etc.  The  oldest  type  of  trade  journal,  periu^, 
is  the  one  which  ctrculates  in  foreign  countries  and  numbers 
among  its  subscribers  importers  and  merchants  engaged  in  selling 
unported  wares  from  other  countries.  Its  advertising  columns  are 


76  EXPORTING  TO  THE  WORLD 


ti9iiaUy  fflHi^ifff^  to  the  business  oi  manufacturers  and  exporters 
seeking  maikets  in  foreign  coontrics  or  agenqr  connections  with 
certain  subscribers  it  is  Icnown  to  reach.  This  type  of  ea^ort  joomal 
is  usually  printed  in  several  different  languages.  A  Spanish, 
French,  Portuguese  and  English  edition  is  ordinarily  published. 
It  do9  not  dicnlate  in  the  United  States.  Its  ahn  is  to  reach 
the  dealers  and  importers  in  foreign  coontrics,  not  the  consumers. 
It  is  published  primarily  for  the  trade.  Of  course,  big  consuming 
concerns  such  as  mines,  construction  companies,  railroads  and 
other  large  hidostries  who  make  direct  purchase  may  be  num- 
bered among  the  export  trade  joomal's  subscribers.  The  artides 
in  these  export  trade  journals  arc  nsnally  aimetf  to  keep  foreign 
buyers  in  touch  with  American  industrial  and  commercial  news 
such  as  advances  in  processes,  improvements,  new  inventions,  and 
novelties. 

The  export  trade  ioomal  naqr  be  general  or  ^ledfic  in  char- 
acter. Some  aim  to  cover  the  entire  fidd  of  txportB  in  a  general 

way,  while  others  devote  their  space  to  certain  specialised  lines, 
such  as  engineering,  farming,  mining,  drugs,  and  leather,  etc. 

The  circulation  of  these  trade  journals  is  limited.  They  are 
not  wM  on  the  newsstands.  No  attempt  is  made  to  obtain  wide 
drcnlatkm  among  a  general  dass  of  readers  in  foreign  countries. 
It  is  the  chief  aim  of  the  publishers  to  get  it  hito  Ae  hands  of 
dealers,  importers  and  big  consumers  who  may  be  interested  in 
the  advertisements  of  American  manufacturers.  Some  of  these 
publications  have  paid  circulations  certifiied  by  the  American 
Audit  Bnrean  of  Circohitkns,  while  otiiert  are  satisfied  in  having 
their  copies  distribnted  carefully  to  sdect  mailing  lists. 

In  speaking  about  the  trade  journal's  activities  in  Cuba,  which 
practically  answers  the  purposes  for  other  countries  in  Latin- 
^\merica,  J.  W.  Sanger,  Trade  Commissioner  for  the  Depart- 
ment of  Coounerce,  has  tUs  to  sqr  in  his  report  on  '^Advertising 
MeOiods  m  Cnba":  "The  exact  poiitkm  and  inqportance  of  tiie 
many  American  export  journals  printed  in  Spanish  and  circulat- 
ing in  the  Cuban  field  are  exceedingly  difficult  to  determine. 
With  two  or  three  exceptions,  they  are  published  primarily  for 
the  trade  and  do  not  attempt  to  reach  the  consumer.  All  the 
leading  ones  are  well  edited,  and  wdl  printed,  and  contain  nmeh. 
information  for  the  Cuban  importer,  merdiant,  and  planter. 
However,  with  few  exceptions,  even  the  best  of  them  have  com- 
paratively limited  paid  circulations,  owing,  undoubtedly,  to  the 


ADVERTISING  IN  EXPORT  TRADE  77 


difficulties  of  obtaining  subscriptions  in  this  field.  But  the  buyer 
of  advertising  space  should  not  too  greatly  discount  their  value 
on  Ais  score,  as  he  is  inclined  to  do  with  puUications  of  strictly 
American  circulation.  Many  of  them  are  mailed  directly  to  lists 
of  selected  names  chosen  with  great  care,  and  it  is  undoubtedly 
ibit  degree  of  care  governing  this  selection  of  names  that  largely 
detemunes  their  vahie  as  advertismg  media.  .  .  . 

**As  one  of  the  important  means  of  supporting  his  campaigns 
in  Cuba,  the  advertiser  may  well  give  close  attention  to  the  claims 
of  at  least  the  leaders  among  the  trade  joomals.  Unquesdon- 
ably,  if  i»operly  drcnhUed,  they  are  a  means  of  assistmg  hhn  in 
his  efforts  to  readi  tiie  market" 

In  judging  the  merits  of  these  export  trade  journals  Mr. 
Sanger  suggests  the  following  questions  to  be  put  to  the  pub- 
lishers: "(a)  What  is  your  total  circulation  each  issue?  (b) 
What  is  yonr  total  drcnktion  in  each  Spanish-Leaking  conntry  ? 
(c)  How  IS  it  secnred?  (d)  What  is  the  ty^  of  your  readers? 
(e)  Is  your  drcuktion  certified  by  the  Audit  Bureau  of  Circu- 
lations? (f)  Are  your  papers  sent  out  in  bulk,  or  are  they 
wrapped,  stamped,  and  individually  addressed?  (g)  Are  your 
editorials  and  news  articles  merely  coo^iled  from  doubtful 
sources  or  written  by  men  who  know  the  country  and  your  type 
of  readers?  (h)  Do  yon  permit  ^vrite-aps'  in  your  reading 
pages  ?^ 

I^'oretgn  Local  Daily 
as  AdwrUsi^g  MtdUm 

There  are  good  and  bad  newspapers  all  over  the  world. 
Every  large  city  has  its  great  daily  newspapers  which  exercise 
a  wide  influence.  In  some  countries  one  or  two  newspapers 
dominate  the  entire  field  In  other  countries  there  is  a  great 
rivalry  between  the  newspapers  of  the  krger  cities.  In  no  coun- 
try in  the  world,  however,  is  the  daily  press  so  well  organized 
and  standardized  as  here  in  the  United  States.  The  manu- 
facturer who  desires  to  advertise  in  a  number  of  newspapers  in 
this  country  consults  his  advertising  agency.  In  a  minute  he 
has  before  him  all  the  necessary  drcuhokm  data.  He  knows 
the  character  of  the  market  to  be  readied.  Accurate  informa- 
tion of  the  same  character  from  foreign  publications  as  a  gen- 
eral rule  is  unavailable.   Advertising  rates  often  vary  with 


78 


EXPORTING  TO  THE  WORLD 


the  temperament  of  the  publisher,  and  it  is  highly  impossible 
to  obtain  the  real  facts  concerning  circulation  upon  which  so 
mttch  stress  is  laid  by  skilUiil  American  advertising  escperts. 

With  the  extension  of  American  business  practices  in  the 
foreign  field,  however,  the  matter  of  obtaining  information 
r^;arding  the  foreign  daily  press  is  becoming  less  serious. 
The  big  American  advertising  agencies,  consdons  of  the 
necessity  of  consumer  advertising  in  foreign  fields,  are  rapidly 
taking  the  proper  steps  to  carefully  analyze  the  foreign  press 
in  all  its  phases.  It  is  a  question  of  time  only  when  exact 
circulation  figures  <d  every  important  newspaper  in  the  world 
win  be  available.  Also,  such  information  as  to  the  character  of 
its  readers,  methods  of  distribution,  and  the  character  of 
market  it  covers  will  be  at  the  disposal  of  American  adver- 
tisers. 

The  use  of  foreign  mewspapm  is  essential  in  the  development 
of  the  maifcet  Consumer  advertising  is  a  necessity.  It  is  not 
enough  to  interest  foreign  buyers  in  American-made  products 

through  the  trade  journals.  Another  step  must  be  taken.  Ameri- 
can merchants  must  help  dealers  move  the  goods  off  the  counters. 
This  can  be  done— as  it  is  done  in  America — by  the  judicious 
use  of  the  newspq>ers.  The  author  has  no  faith  in  the  statement 
that  the  wcurld  lads  good  newq^spers  whidi  may  be  used  for 
advertising  American  goods.  The  world  is  full  of  good  media. 
If  there  is  a  country  without  its  big  daily  newspaper  an  investi- 
gation will  show  that  that  country  is  not  sufficiently  developed  to 
warrant  the  interest  of  an  American  merchant.  Where  there  are 
big  markets  one  will  generally  find  big  newspapers^ 

The  Foreign  Local 
Pifiodkal  Journals 

Fc»reign  local  and  periodical  journals  among  which  may  be 
numbei^  trade  and  class  publications  are  not  as  numerous  in 
foreign  countries  as  in  the  United  States.  Even  those  that 

have  gained  a  commanding  influence  and  a  wide  circulation 
cannot  compare  with  our  own  well  known  popular  magazines. 
They  are  not  as  skillfully  made  up  as  in  this  country.  The 
cardHil  editing  and  printing  technique  that  is  put  into  an 
Amotam  publication  is  sadly  missing  in  a  foreign  journal. 
Hiere  are  some  periodicals,  however,  that  nmk  very  high  in 


r 


ADVERTISING  IN  EXPORT  TRADE  79 


their  own  fields,  and  deserve  serious  attention  by  American 

advertisers.  Although  their  true  circulations  are  obscure  there 
is  no  question  that  some  of  these  publications  are  widely  read. 
There  is  a  journal  published  in  Spain  whose  circulation  not 
only  spreads  throughout  that  country  but  in  every  Spanish- 
speaking  country  in  the  world.  Other  countries  in  Europe  as 
well  as  the  English-speaking  colonies  of  the  world  boast  of 
trade  and  class  pikers.  The  Germans,  French,  Belgians, 
Dutch,  Danish  and  other  peoples  engaged  in  foreign  trade, 
also,  have  their  trade  publications  of  varying  character  and 
standards. 

MiscelUmeous  Media 
for  Export  AdverHsmg 

The  American  manufacturer  must  be  on  his  guard  against 
advertising  schemes  of  one  kind  or  another  that  aim  to  sep- 
arate his  hard-earned  gold  from  his  cash  drawer.  The  brisk- 
ness in  export  trade  at  the  present  time  has  tempted  many  of 
these  schemers  to  lay  out  plans  of  a  questionable  advertising 
value  for  the  unwary  merchant.  The  same  good  judgment  as 
applied  in  the  local  field  should  serve  as  the  formula  to  keep 
away  from  these  designing  individuals  who  claim  to  have 
found  the  "royal  road  to  success"  in  foreign  advertising. 

**Special  Export  Editions"  are  often  launched  by  regularly 
established  newspapers  and  periodicals.  The  rate  for  adver- 
tising in  these  editions  is  usually  higher  than  in  the  ordinary 
issues,  due  to  the  fact  that  free  write-ups  are  included.  The 
advantages  of  "special  export  editions"  or  any  kind  of  ''special 
editions"  are  questionable.  The  shrewdest  American  adver- 
tisers who  have  tried  all  sorts  of  publicity  schemes  are  more 
and  more  beginning  to  look  upon  these  special  editions  as 
wasted  effort  from  an  advertising  point  of  view.  The  fact 
that  some  of  our  more  conservative  newspapers,  and  weekly 
and  monthly  journals  have  within  recent  years  frowned  upon 
method  of  increasing  their  advertising  receipts,  preferring 
to  rely  on  their  regular  business  for  their  success,  justifies  the 
statement  that  the  special  edition  is  fast  losing  its  popularity. 
The  fact  that  it  is  a  "one  time"  proposition  is,  alone,  a  suffi- 
cient indictment  agilast  it 


80  EXPORTING  TO  THE  WORLD 


Trode  Direcimry 

as  Advertising  Mtdmm 

Trade  directories  in  many  forms  are  quite  common.  Those 
published  and  circulated  in  the  United  States  are  supposed  to 
contain  dasdfied  ]ists  of  tranness  men  ckigaged  in  foreign; 
trade.  Others  are  circulated  in  foreign  countries  and  contain 
the  names  of  manufacturers.  These  directories  are  aimed  to 
direct  the  foreign  buyer  to  the  proper  sources  for  special  lines 
in  wiiich  he  may  be  interested.  Some  of  these  directories 
usually  find  their  way  into  the  offices  of  American  consuls 
abroad,  where  they  may  be  consulted  by  foreign  merchants. 
There  is  no  question  that  these  directories  are  capable  of 
doing  some  good  work  for  American  manufacturers.  They 
are  <^en  consulted.  Before  subscribing  to  this  form  of  adver- 
tising, however,  the  manufacturer  should  find  out  how  and 
where  these  directories  are  to  be  distributed,  and  whether  the 
price  he  must  pay  is  consistent  with  the  service  rendered. 
Of  this,  the  manufacturer,  alone,  is  the  judge. 

Export  trade  journals  circulated  in  this  country  exclusively 
and  containing  editorial  matter  of  interest  to  manufacturers 
and  exporters  and  importers  alike,  are  growing  in  number. 
In  New  York  city  alone  there  are  at  least  half  a  dozen  of  these 
publications  coming  under  this  classification.  Articles  cover- 
ing specific  problenis  in  foreign  trade  add  considerable  value 
to  these  journals.  They  aim  to  circulate  among  American 
merchants  vitally  interested  in  some  phase  of  foreign  commerce. 
These  export  trade  journals  should  not  be  confused  with 
house  organs  which  are  published  by  certain  American  export 
commission  houses,  and  conducted  in  connection  with  their 
regular  merchandising  business. 

Outdoor  Adtfertismg 

in  Foreign  Countries 

Street-car  and  outdoor  advertising  is  not  confined  solely  to 
the  United  States.  This  form  of  advertising  is  in  evidence 
in  nearly  all  the  important  countries  dt  the  worid.  In  some 
countries  street-car  and  outdoor  advertising  is  confined  purely 

to  the  large  cities.  Electric  signs,  also,  will  be  seen  in  com- 
mercial centers.   These  three  forms  of  advertising,  however. 


ADVERTISING  IN  EXPORT  TRADE  81 


are  not  as  well  organized  and  developed  as  in  the  United 

States.   There  is  plenty  of  room  for  improvement. 

The  world  is  a  virgin  field  for  American  motion  pictures. 
The  American-made  "movie"  has  practically  crowded  foreign 
competitors  off  the  field.  The  foreign  world  is  very  much 
interested  in  American  methods,  and  there  is  no  better  way 
to  visualize  American  industry  and  progress  than  through  the 
motion  picture.  American  manufacturers  who  have  '"filmed" 
tlieir  plants  for  domestic  exhibition  shottld  turn  their  eyes 
toward  foreign  countries  where  their  pictures  will  be  enthusi- 
astically received.  The  titles,  of  course,  should  be  translated 
into  the  language  of  the  country  where  they  are  to  be  exhib- 
ited. The  most  successful  motion  picture  for  foreign  purposes 
vniX  be  that  one  which  visualizes  the  entire  process  of  manu* 
facture  of  an  article  in  story  form.  In  other  words,  the  film 
should  be  made  under  the  direction  of  a  skillful  director  who 
understands  the  art  of  telling  a  story  in  a  motion  picture. 

Copy  for  Adviftismg 
m  Foreign  Cotmiries 

Advertising  copy  as  used  in  the  United  States  will  not  "go" 
in  foreign  countries  as  a  general  rule.  The  foreign  newspaper 
reader  is  accustomed  to  conservative  methods  in  advertising. 
The  bombastic  page  advertisement  often  seen  in  the  Ameri- 
can press  needs  considerable  deleting  and  rewriting  before 
it  should  be  permitted  to  leave  this  country.  It  must  be 
understood  that,  in  preparing  copy  for  the  world,  the  ad- 
vertising writer  must  take  into  consideration  different  lan- 
guages, customs,  habits,  idiosyncracies,  peculiarities  and  what 
not  in  the  countries  where  his  copy  is  to  be  placed.  Advertis- 
ing copy  that  may  be  satisfactory  in  Australia  may  not  be 
used  in  London.  Also,  copy  for  the  different  Latin-American 
countries  requires  considerable  changing.  The  problems  that 
the  copy  writer  has  to  face  are  interestingly  told  by  Mr.  J.  W. 
Sanger,  Trade  Commissioner  for  the  Department  of  Com- 
merce, in  referring  to  the  Cuban  situation. 

''A  well  known  Cuban  who  has  spent  many  years  in  both 
the  United  States  and  Europe  said  to  me,'*  Mr.  Sanger  writes : 
**  *Wc  Cubans  do  not  think  constructively  in  the  Anglo-Saxon 
sense,  but  enjoy  enjoying  our  emotions.   We  love  color  and 


88  EXPORTING  TO  THE  WORLD 


life  in  everything,  and  wc  demonstrate  it  in  the  bright  colors 
of  our  automobiles  and  in  the  spots  of  pink,  terra  cotta,  and 
blue  of  our  older  houses.'  His  opinion,  and  it  was  substan- 
mlly  supported  by  many  others,  has  a  distinct  bearing  upoii 
the  'copy  appeal'  necessary  in  Cuba.  Carried  to  its  logical 
conclusion,  the  evidence  of  these  witnesses  and  the  writer's 
observations  both  tend  to  indicate  that  'reason  why'  copy, 
commofi  in  the  United  States,  finds  little  response  in  Cuba 
esccept  in  the  advertising  of  articles  of  a  dbtinctly  technical 
nature." 

Often  social  conditions  and  climate  determine  the  character 
of  copy  for  foreign  countries.  Again  quoting  Mr.  Sanger: 
"In  Cuba  the  writer  observed  one  advertiaement  of  an  Ameri- 
can cleaning  fluid  or  wax,  in  which  the  illustration  pictured 
the  man  of  the  house  and  his  wife  deeply  interested  in  the 
work  of  cleaning  their  car.  In  Cuba  all  cleaning,  without 
exception,  is  done  by  the  chauffeur  or  in  a  public  garage. 
Even  the  cheapest  automobiles  are  driven  by  chauffeurs,  and 
the  owner  exerts  no  appreciable  influence  as  to  the  kind  of 
cleaniog  fluid  or  polishing  wax  used.  He  is  the  opposite  to 
the  American  who  has  a  turn  for  mechanics  and  who  does  not 
object  even  to  cleaning  his  own  car  at  times. 

"Another  advertisement  of  a  well-known  American  proprie- 
tary medicine  widely  advertised  as  a  preventive  of  colds 
riiowed  the  dai^per  of  cold  weather  and  its  attendant  sickness 
by  picturing  two  children  in  a  snowstorm.  Cuba  is  in  the 
tropics  and  snow  has  never  fallen  there." 

These  quotations  from  Mr.  Sanger  serve  as  typical  illustra- 
tions of  problems  that  may  be  encountered  in  other  sections 
of  the  globe.  It  is  one  thing  to  prepare  copy  that  should 
stimulate  interest  and  inquiries  in  one's  articles,  but  it  is  an- 
other thing  to  prepare  it  in  such  a  way  as  to  take  into  con- 
sideration a  hundred  and  one  peculiarities  that  may  be  found 
to  exist  in  one  form  or  other  in  strange  lands. 

Sim^Uiiy  EssmHal 
M  AdptrHsmg  Cofy 

•  Simplicity  should  be  the  keynote  of  advertising  copy  for 
foreign  purposes.  A  formal  and  dignified  style  yet  interest- 
ing enough  to  inspire  the  reader's  interest  should  be  the  basic 


ADVERTISING  IN  EXPORT  TRADE  83 


mark  set  by  the  advertising  writer.  The  development  of  this 
rule  will  be  guided  by  experience  in  the  different  markets. 
There  are  no  hard  and  fast  rules  in  foreign  advertising. 
Knowledge  of  the  fundamentals  is  essential.  Once  acquiring 
this  knowledge,  success  in  preparing  copy  that  will  bring 
results  will  largely  be  determined  by  the  seriousness  with 
which  the  advertiser  studies  his  foreign  problem  as  well  as  in 
the  selection  of  reliable  advertising  mediums. 

The  power  of  advertising  lies  in  its  cumulative  value.  It 
is  not  the  advertisement  that  appears  tcmiorrow  alone  that 
will  bring  results  to  ^e  man  who  pays  the  space  bill;  it  is  ^e 
copy  that  is  keyed  to  a  certain  schedule  planned  by  experts 
that  will  justify  proper  expenditures  in  the  final  reckoning. 
It  is  needless  to  emphasize  the  necessity  of  carefully  planned 
advertising  campaigns.  They  are  absolutely  essential  in  the 
United  States.  It  is  a  policy  that  must  be  adopted  in  foreign 
cotmtries. 

Export  Catalogues 
in  Foreign  Trade 

* 

The  export  catalogue  serves  as  the  medium  of  direct  adver- 
tising. The  export  catalogue  goes  right  into  the  office  or 
home  of  the  prospective  purchaser.  The  same  degree  of  care 
as  exercised  in  the  regular  correspondence  with  foreign  cus- 
tomers should  be  brought  into  play  in  the  preparation  of  the 
export  catalogue.  The  caUlogue  should  tell  the  whole  story 
of  the  manufacturer's  product  It  should  leave  nothing  for 
guesswork.  It  should  be  well  illustrated.  Every  article 
should  be  carefully  described.  In  preparing  these  descrip- 
tions and  illustrations  the  manufacturer  should  take  it  for 
granted  that  the  other  fellow  knows  nothing  about  his  mer- 
chandise. The  catalogue  should  be  written  in  the  language 
of  the  customer  lor  whom  it  is  intended.  There  has  been 
considerable  complaint  on  this  score  from  various  foreign 
sources.  An  American  consul  in  Italy  complains  that  Ameri- 
can manufacturers  have  not  broken  themselves  from  the  habit 
cf  communicating  with  Italian  merchants  in  English,  and  of 
sending  catalogues  in  a  language  they  not  only  .do  not  under- 
stand, but  hurk  the  ^ciHties  for  having  it  made  understand- 
able.  A  consul  in  Brazil  insists  that  Portuguese  is  the  Ian- 


84  EXPORTING  TO  THE  WORLD 


gttage  of  Brazil  and  that,  therefore,  catalogues  should  be  in 
the  Portuguese  and  not  the  ^Muuah  tmigue. 

The  mobilization  of  domestic  catalogues  written  in  English 
for  foreign  service  in  order  to  economize  is  false  economy. 
While  there  are  many  foreign  customers  who  may  be  able  to 
translate  and  read  the  text  of  American  catalogues  with  a 
great  deal  of  interest,  nevertheless  there  are  countless  others 
who  will  appreciate  a  catalogue  printed  in  a  language  they 
understand.  In  reaching  out  for  foreign  business  through 
the  medium  of  the  printed  word  it  is  generally  agreed  that  the 
prospect  should  be  addressed  in  his  own  txmgue.  The  socmer 
this  policy  is  adopted  by  the  new  b^^inner  the  better  it  will 
be  for  his  business. 

In  making  up  foreign  catalogues  the  same  care  exercised 
in  translations  in  correspondence  should  be  taken  in  preparing 
the  text  Translations  must  be  perfect  They  must  be  under- 
stood wherever  they  are  sent  Translations  should  not  be  left 
to  individuals  whose  bid  has  been  the  lowest,  but  to  those 
who  can  prove  their  efficiency.  The  language  of  the  country 
where  the  catalogue  is  to  circulate  should  be  thoroughly 
understood.  The  English  language  should  not  be  misunder- 
stood. The  perfect  translator  is  he  who  understands  both 
languages. 

A  cheap  looking  catalogue  should  be  avoided.  The  cata- 
logue is  the  show-window  of  the  manufacturer.  A  neat  dis- 
play attracts  the  customer.  A  "shabby"  appearance  detracts. 
Care  should  be  exercised  against  using  inferior  grades  of 
paper.  This  precaution  is  necessary  in  order  to  avoid  poor 
reproductions  of  engravings.  The  clearest  possible  pictures 
are  necessary  for  an  export  catalogue,  and  the  selection  of  a 
satisfactory  grade  of  paper  will  assure  this  result 

FM  InformaHam  If 
Necessary  m  CaUdogue 

In  the  absence  of  the  personal  representative  me  export 
catalogue  is  the  manufacturer's  "right  hand  man"  in  the  field. 
Throus^  the  medium  of  the  catalogue  the  manufacturer  is 
endeavoring  to  create  interest  in  his  merchandise.  He  would 

like  to  draw  an  inquiry  which  later  may  turn  into  a  huge 
order.   The  success  with  which  he  will  achieve  these  aims 


ADVERTISING  IN  EXPORT  TRADE  85 


rests  with  the  skill  which  he  has  employed  in  the  preparation 
of  his  mouthpiece.  Has  he  made  a  proper  introduction  ?  Has 
he  made  a  careful  presentation  o£  his  case?  Has  he  Ic^cally 
driven  home  his  points  as  to  quality,  utility,  or  price?  Has 
he  told  his  story  without  exaggeration?  An  affirmative 
answer  to  these  questions  serves  as  some  of  the  fundamentab 
required  in  the  making  of  a  good  catalogue. 

Half 'tone  Cuts  Should 
Not  Exaggerate  Article 

It  18  an  old  complaint  that  some  of  our  half  tone  cuts 
pearing  in  American  export  catalogues  look  so  attractive  that 

the  purchaser  of  an  article  which  has  been  so  temptingly 
visualized  is  often  doomed  to  a  keen  disappointment.  The 
'*real  thing"  is  so  much  different  from  the  picture.  It  is  not 
in  the  least  difficult  for  a  skillful  artist  to  picture  a  gun  or 
watch  of  nominal  value  so  that  it  will  look  like  an  expulsive 
article.  While  the  artist's  skill  is  to  be  commended,  neverthe- 
less, special  care  should  be  taken  to  accurately  describe  the 
article  in  order  to  avoid  any  misunderstanding  on  its  sale.  It 
is  a  much  better  policy  to  be  absolutely  honest  in  a  careful 
deacr^ktion  at  the  outset  than  to  constantly  endeavor  to  ap- 
pease the  wrath  of  some  disappointed  buyer  who  may  feel 
that  he  has  been  imposed  upon.  When  the  foreign  purchaser 
buys  an  article  from  a  catalogue  he  expects  it  to  be  exactly 
as  described.  He  places  a  certain  amount  of  confidence  in  the 
catalogue.  How  much  that  confidence  is  deserved  depends 
on  the  good  faith  the  manufacturer  exhibits  in  the  preparation 
cyf  his  literature.  He  must  remember  that  the  logical  policy 
is  that  policy  that  will  insure  a  permanent  business.  A  per- 
manent business  abroad  depends  on  the  confidence  he  can 
inspire  from  new  customers.  Surely  he  cannot  build  up  a 
permanoit  trade  bgr  questionable  methoda, 

H&w  Prices  Are  to  Be 

Quoted  in  Catalogues 

There  are  instances  where  American  manu&cturers  have 
sent  catalogues  without  prices  accompanying  the  articles  de- 
scribed therein.    An  American  consul  relates  an  instance 


M  EXPORTING  TO  THE  WORLD 


where  a  large  American  implement  manufacturer  lost  a  valu- 
able order  in  an  Australian  field  because  the  buyer  was  un- 
able to  obtain  any  mformaliofi  about  the  prkes  of  some  articles 
he  very  much  desired,  and  which  the  manufacturer  had  for  sale. 
Catalogues  should  be  accompanied  with  prices.  Catalogues  meant 
for  distribution  among  the  consumer  population  should  not 
contain  prices  unless  the  suggestion  or  advice  of  ag<ents  in  the 
territory  in  which  th^r  are  to  be  given  is  first  sought  But 
catalogues  that  are  likely  to  fall  into  the  hands  of  importers, 
jobbers,  wholesalers  and  retailers  alike  should  not  contain 
list  prices  unless  accompanied  with  liberal  discount  terms  in 
order  that  the  wholesalers  and  o^ers  engaged  in  the  resale 
of  goods  may  be  protected  against  the  betrayal  of  their  profits. 
Further  protection  may  be  gained  by  inserting  two  separate 
lists  of  discount  sheets  in  the  catalogues,  one  to  retailers  and 
the  other  to  those  who  do  business  with  retailers. 

The  export  catalague  should  function  something  like  the 
export  traveling  salesman.  It  should  be  capable  of  giving 
complete  information  regarding  the  manufacturer's  wares. 
Moreover,  it  should  enable  tbe  customer  to  accurately  esti- 
mate what  the  goods  are  likely  to  cost  him.  Unless  the  cata- 
logue is  accompanied  with  full  explanations  on  this  score  the 
customer  may  lose  all  interest  and  seek  some  other  firm  that 
extends  better  facilitica. 

InformaHam  Necessary 
m  Export  Catalogue 

The  export  catalogue  should  be  able  to  answer  the  following 
questions: 

Is  shipment  to  be  f.  o.  b.  factory  or  f.  a  b.  port  of  shipment? 
Is  it  to  be  f.  o.  b.  steamer? 

Are  there  any  additional  expenses  such  as  packing,  cartage, 
etc.? 

If  packing  charges  are  not  included  what  m  appioxinimte 

costs  of  other  packing  peculiar  to  requirements  of  goods?" 

This  information  is  necessary  as  it  enables  the  customer  to 
make  an  approximate  estimate  of  the  cost  of  the  goods  when 
landed  at  the  port  of  destinaticm. 

Nor  does  this  requirement  end  here.  All  vr^ghts  and  dtmen- 


ADVERTISING  IN  EXPORT  TRADE  87 


sions  of  each  unit  of  the  shipment  should  be  given  in  the 
metric  system  as  well  as  in  the  English  system.  The  gross 
and  net  we^t  of  the  goods  as  packed  and  prepared  for  ship- 
ment, with  tbe  metric  equivalents  included,  should  not  be 
overlooked,  as  it  enables  the  buyer  to  estimate  freight  costs 
and  the  approximate  ultimate  cost  of  the  goods  when  he  re- 
cdves  them.  Full  description  of  how  the  goods  are  to  be 
packed  should  be  given,  as  well  as  a  statement  of  tl»  costs  of 
other  methods  of  packing  that  the  customer  may  require.  It 
must  be  remembered  that  the  weight  of  the  packing  may 
prove  to  be  a  very  important  factor  in  determining  the  cost  of 
merchandise  to  the  importer.  It  is  advisable  to  invite  st^es- 
tions  from  the  importer  as  to  the  best  means  of  packing  goods 
for  shipment  to  his  territory. 

Quoting  Prices  in 
Amerkam  Cmrency 

The  foreign  purchaser  probably  knows  more  about  inter- 

national  currency  than  the  average  American  manufacturer. 
With  very  little  effort  he  can  find  the  equivalent  of  an  Ameri- 
can dollar  in  a  foreign  currency.  Therefore,  in  quoting  in 
catalc^es  and  price  lists,  it  is  advisable  to  name  the  prices 
m  American  cnrren^r*  If  the  manufacturer  wishes  to  include 
the  equivalent  in  other  coins,  however,  he  should  confine  him- 
self only  to  the  most  important  currencies,  such  as  the  pound 
sterling,  francs  and  marks,  which  are  well  known  all  over  the 
world. 

Terms  of  Payment  far 
Merchandise  Bought 

There  has  been  considerable  criticism  on  the  part  of  for- 
eigners to  the  effect  that  American  manufacturers  demand 
cash  in  advance  for  goods  purchased.  This  is  true  only  in 
cases  where  the  customer  is  a  total  stranger,  and  where  his 
credit  rating  is  unknown.  In  making  quotations  in  the  cata- 
logue terms  of  payment  should  be  included.  The  best  au- 
thorities on  export  trade  agree  that  these  terms  should  be  either 
strictly  cash  or  some  form  of  guarantee  b^ore  goods  are 
shipped.   The  buyer  may  find  relief  from  this  apparently 


88  EXPORTING  TO  THE  WORLD 


difficult  method  of  doing  business,  however,  by  placing  his 
orders  through  commission  houses,  or  sending  a  draft  along 
with  his  list  of  requested  articles.  Also,  his  local  bankers 
may  be  requested  to  open  a  credit  with  American  bankers. 
After  mutual  confidences  have  been  established,  however,  it  will 
not  be  difficult  for  a  foreign  purchaser  to  buy  merchandise  in  the 
United  States  on  the  most  agreeable  terms  possabk. 

How  Catalogues  Should 
Be  Distributed  to  Trade 

Catalogues  are  expensive  to  produce.  They  serve  as  a 
direct  medium  through  which  a  foreign  business  may  be  de- 

T eloped  by  an  American  manufacturer.  How  extensive  this 
business  may  become  depends  largely  on  the  intelligent  dis- 
tribution of  this  valuable  literature.  Catalogues  in  the  Por- 
tuguese language  should  not  be  sent  to  Argentina  or  Chile» 
where  Spanish  is  spoken.  Neither  should  catalogues  aimed 
to  reach  wholesalers  fall  into  the  hands  of  retailers  or  con- 
sumers. The  best  available  lists  of  retailers,  wholesalers,  or 
others  engaged  in  reselling  should  be  consulted.  Reliable 
names  may  be  obtained  from  well  known  trade  directories  or 
from  commercial  organizations.  Export  trade  journals  of  the 
better  class  are  able  to  furnish  competent  lists.  It  is  possible 
that  foreign  banking  institutions  may  be  able  to  submit  good 
lists  of  names.  The  American  consuls  in  different  parts  of 
the  world  as  well  as  commercial  attaches  often  ask  for  cata- 
logues of  American  &rms  to  distribute  among  interested  im- 
porters. 

Import  Duties  on 

American  Catalogues 

Catalogues  cannot  be  sent  to  foreign  countries  indiscrimr 
inatdy.  The  duty  mi  mdtk  material  in  various  countries  must 
be  investigated  before  a  plan  of  distribution  is  launched.  When  it 
is  known  that  in  some  countries  the  duty  on  catalogues  is 
greater  than  that  on  the  accompanying  merchandise  the  neces- 
sity of  taking  due  precaution  in  this  matter  will  be  recognized. 
In  order  to  protect  foreign  customers  from  the  payment  of 


r 


ADVERTISING  IN  EXPORT  TRADE  89 


duty  on  this  sort  of  material,  catalogues  should  never  be  in- 
cluded with  the  shipment  of  goods.  If  advertising  matter, 
such  as  catalogues,  posters,  etc,  is  to  be  sent,  it  should  be 
packed  in  a  separate  case,  and  only  on  the  instructions  of  the 
customer.  In  nearly  every  country  in  the  world  the  manu- 
facturer will  discover  certain  duty  obligations  on  export  cata- 
logues. Before  planning  their  distribution  he  should  consult 
the  consul  of  the  country  in  which  he  desires  to  distribute  his 
literatnre  for  aocturate  inf ormatioa.  ^ 


CBAnm  Yin 


EXPORT  HOUSES 
The  export  merchant— The  expokt  €Oif  xissioh  B0II8»-4I6w 

EXK»T  HOUSES  OPBRATB  IK  FOKBUSir  FISUD8— ADVANTAGES  AND 

maAmrANTAGBS  or  exkut  houses— Futurb  of  k3cpoit  commis- 
sion HOUSES 

American  export  houses  commonly  known  as  the  expcnrt 
commission  houses  or  the  tsepott  merdiants  are  the  pioneers 

of  American  foreign  trade.  They  have  blazed  the  trail  into 
strange  lands.  They  have  introduced  articles  made  by  Amer- 
ican workmen  among  peoples  of  a  different  language  and 
cnstxmis  other  than  our  own.  They  are  the  cwiginal  propa- 
gandists of  American  skill.  Wherever  there  have  been  found 
people  who  commanded  a  certain  purchasing  power  or  who 
had  valuable  articles  to  barter  there  would  be  found  the  pio- 
ncer  American  trader  ready  to  make  a  bargain.  The  Ameri- 
can export  houses  are  the  ''middlemen'*  in  our  export  trade. 
A  half  century  ago  they  controlled,  perhaps,  almost  the  entire 
volume  of  our  business  with  foreign  countries.  As  American 
manufacturers  are  b^^inning  to  recognize  the  necessity  of 
cxteiMiing  theur  direct  sales  activities  to  foreign  countries, 
however,  these  commission  houses  are  gradually  losing  what 
was  once  a  firm  hold  of  the  export  trade.  But  it  never  will 
be  entirely  lost.  There  will  always  be  middlemen  in  foreign 
trade  just  as  there  are  middlemen  in  domestic  business.  The 
export  house  in  foreign  commerce  is  a  valuable  institution. 
It  knows  the  business.  It  has  marshaled  together  a  force  of. 
skillful  and  competent  men  who  thoroughly  understand  every 
branch  of  business  abroad.  It  understands  the  routine  in- 
volved in  the  shipment  of  goods  by  sea,  that  is  not  encoun- 
tered  at  home.  It  knows  the  customs  and  habits  of  foreign 
peoples.  It  knows  the  laws  and  regulaticms  and  other  detaib 
peculiar  to  transacting  business  with  aisloincrs  in  a  foreign 

90 

/  ■ 


EXPORT  HOUSES 


91 


country.  In  other  words,  the  export  house  is  a  specialist  in 
its  line  of  business,  and  this  is  an  age  of  specialists. 

The  Esport  Merchant  mtd  tim 
Export  Commitskm  Houu 

As  our  foreign  commerce  began  to  gradually  grow  the  func- 
tions of  these  export  houses  engaged  in  foreign  trade  became 
more  complicated.  Originally,  there  was  a  sharp  distinctkm 
tictwccn  the  export  commission  house  and  the  export  mer- 
chant. The  export  merchant  confined  his  activities  to  purely 
buying  and  selling  on  his  own  account.  The  export  commis- 
sion house  confined  its  activities  to  the  execution  of  orders  in 
the  United  States  for  foreign  customers,  never  buying  mer- 
chandise on  its  own  account. 

With  the  development  of  our  foreign  commerce,  however, 
and  the  extension  of  our  means  of  communication  and  trans- 
portation to  even  the  most  out-of-the-way  places  of  the  globe 
the  functions  of  these  houses  have  been  constantly  increasing, 
and  now  we  find  the  export  merchant  not  only  continuing  in 
his  original  policy  but  assuming  some  of  the  functions  that 
were  once  exclusively  controlled  by  the  export  commission 
house,  and,  on  the  other  hand,  we  find  the  export  commission 
house  in  many  mstances  invading  the  field  of  activities  that 
tradition  originally  assigned  to  the  export  merchant.  In  fact, 
this  confusion  of  functions  has  become  so  pronounced  that  it 
is  now  difficult  to  determine  just  where  the  line  should  b^ 
drawn  between  what  has  been  commonly  known  as  an  export 
merchant  and  an  export  commtsskm  house. 

FuHctians  of  the 

Export  Merchant 

^  In  theory  the  export  merchant  purchases  just  like  the  domes- 
tic jobber  or  wholesaler.  He  buys  where  he  can  obtain  the 
km^  prices  and  he  sells  wherever  he  can  get  the  best  prices 
for  his  merchandise.  He  engages  in  this  business  on  his  own 
account.  Unlike  the  export  commission  house,  the  export 
merchant  need  not  wait  until  some  foreign  customer  sends  in 
an  order  or  indent  for  American  goods.  If  he  feeb  that  he  can 
huj  goods  at  an  advantage  today  or  ho6k  hdght  space  for 


n  EXPORTING  TO  THE  WORLD 


such  and  such  a  date  he  will  do  H  without  the  necessity  of 
receiving  instructions  from  anyone.   He  is  his  own  master. 

Operations  of  an 
Expwt  Merchmt 

The  export  merchant  is  usttally  to  he  found  at  some  great 

seaport  like  New  York  or  San  Francisco.  From  these  points 
he  directs  operations  that  may  cover  the  greater  part  of  the 
world  or  only  a  portion.  When  the  held  is  hroad  the  merchant 
divides  his  business  mto  departments  so  that  each  department 
may  individually  conduct  the  business  of  a  certain  territory. 
For  instance,  there  may  be  a  Far  East  department,  or  a  South 
African  department,  or  a  Latin-American  department.  It  is 
necessary  to  divide  the  business'  mto  these  various  depart- 
ments because  of  the  special  requirements  and  peculiarities 
of  each  geographical  group.  Only  a  force  of  employes  that 
has  specialized  in  the  handling  of  the  business  in  each  of  these 
groups  for  a  long  period  of  time  can  e&ciently  handle  the 
great  amount  of  detail  work  involved. 

Instances  are,  indeed,  rare  where  an  export  merchant  en- 
deavors to  cover  the  world  in  the  development  of  his  business. 
It  does  not  pay.  Such  an  attempt  involves  the  thin  spread- 
ing of  his  energies  over  a  great  amount  of  territory,  and  much 
uncertainty,  whereas,  if  he  would  conhne  himself  to  one  geo- 
graphical division  where  conditions  are  uniform,  the  efficiency 
of  his  staff  would  not  only  be  increased  but  undivided  atten- 
tion to  the  development  of  that  particular  market  would  be 
assured.  There  are,  of  course,  certain  large  exporters  of 
staple  articles  that  must  of  necessity  confine  themselves  to  no 
individual  zone.  Among  these  may  be  inchided  exporters  of 
wheat  or  cotton* 

How  Export  Merehami 
Transacts  Business 

When  the  foreign  importer  wants  to  know  the  cost  of  an 
article  or  an  assortment  of  articles  for  the  purpose  of  quoting 
his  local  trade  he  is  interested  in  knowing  the  approximate 

cost  of  the  merchandise  at  the  port  of  destination  so  that  he 
may  be  able  to  intelligently  figure  his  price  therefrom.  As  the 


f 


EXPORT  HOUSES 


93 


expcnrt  merchant  receives  many  of  these  requests  for  quota- 
tions by  cable  he  must  of  necessity  detail  the  cost  of  the  mer- 
chandise, the  marine  insurance  and  the  freight  charges.  This 
is  the  modern  c.  i.  f.  term  which  involves  the  merchant  in  the 
obligation  to  furnish  the  goods,  provide  the  transportation  to 
port  of  destination,  and  to  insure  the  shipment  against  ocean 
risks.  This  serves  as  a  great  advantage  to  the  importer  who 
is  in  a  position  to  precisely  know  what  his  goods  will  cost 
when  they  arrive  so  that  he  can  make  his  own  price  to  the 
customer.  Furthermore,  the  importer  is  relieved  of  the  trou- 
ble of  booking  freight  space  as  well  as  the  risk  involved  in 
the  changing  freight  rates.  The  export  merchant,  being  on 
the  ground,  is  in  a  better  position  to  exercise  his  discretion  in 
the  booking  of  freight  than  the  importer.  He  is  necessarily  in 
close  touch  with  shipping  conditions.  The  merchant,  of 
course,  is  not  confined  to  quoting  c.  L  f.  terms  exclusively. 
The  nature  of  the  relations  existing  between  merchant  and 
importer  may  determine  the  method  of  quotation.  In  a  later 
chapter  these  c.  i.  f.  terms  will  be  more  fully  explained. 

Export  Merchant's  Branches 
at  Home  and  Abroad 

The  bona  fide  export  merchants  of  today  have  branch  offices 
in  every  section  where  their  business  has  been  developed. 
This  means  that  they  may  have  branches  at  home  as  well  as 
abroad.  Owing  to  great  distances  and  the  necessity  of  having 
personal  attention  at  tiie  principal  ports  of  shipment  in  ^e 
United  States  the  export  merchant  whose  volume  of  business 
justifies  it  has  now  a  branch  office  in  each  of  the  principal  sea- 
ports of  the  United  States  through  which  the  great  volume 
of  the  American  export  trade  passes  to  foreign  countries. 

A  well  known  export  merchant  has  a  string  of  branches 
along  the  west  coast  of  South  America.  These  branches  dom- 
inate the  territory  in  which  they  are  situated.  The  organiza- 
tion of  the  foreign  field  is  even  extended  to  sub-branches 
which  are  responsible  to  the  main  branch  of  the  country,  and 
in  turn  the  main  branch  is  responsible  to  the  head  office  in 
the  United  States.  The  branch  manager  must  be  not  only  a 
competent  man,  but  a  man  with  a  vision.  He  must  develop 
the  business  as  well  as  keep  the  home  office  in  touch  with 


U  EXPORTING  TO  THE  WORLD 


dmifiiig  local  condhioiis.  He  imist  know  the  financial 
strength  of  those  with  whom  he  is  doing  hnsincas.  He  must 

know  at  all  times  what  his  competitors  are  doing  and  con- 
stantly keep  the  home  office  informed  by  cable  or  by  mail  as 
to  the  actnai  situation.  The  advantage  oi  a  branch  office  lies, 
of  conrse^  in  the  fact  that  it  is  on  the  ground  to  know  first 
hand  what  the  conditions  and  possibilities  are,  as  well  as  to 
contribute  the  element  of  the  personal  equation  in  the  market, 
which  is  a  powerful  factor  nowadays  in  devebping  an  export 
hostness*  ^ 

Foreign  Agency  for 
Expori  Merchant 

The  nearest  approach  to  a  branch  office  for  an  eaqport  mer- 
chant is  a  foreign  agency  which  is  supposed  to  render  prac- 
tically the  same  services  as  a  foreign  branch  office.  The 
foreign  agent  is  expected  to  do  all  in  his  power  to  develop 
business  for  the  ^port  merchant  The  foreign  agent  may 
have  the  exclusive  representation  of  more  than  one  line»  pro- 
vided, of  course,  there  is  no  conflict  of  interests.  An  agent 
must  not  represent  two  different  makes  of  a  typewriter  or  an 
automobile.  The  kind  of  agent  the  American  export  merchant 
is  always  looking  for  is  he  who  takes  the  initiative  in  develop- 
ing business,  such  as  sending  out  solicitors  to  interview  the 
trade,  and  who  constantly  keeps  his  principal  informed  of 
market  amditbns  or  other  devek>pments  that  may  be  of  im- 
portance to  the  home  office.  The  diligence  with  which  the 
agent  functions  determines  his  continued  relations  with  the 
export  merchant. 

Mom  Exp^Mri  Mnekmi 
Works  Manufacimmr 

Individual  cases,  of  course,  determine  the  relations  between 
export  merchant  and  manufacturer  in  the  exploiting  of  the 
hitter's  goods  in  foreign  helds.  Authorities  on  the  subject 
of  relations  between  these  principals  agree  that  the  contract 
that  has  found  most  favor  is  that  which  provides  that  tiie 
export  merchant  shall  guarantee  to  purchase  a  stated  quantity 
of  the  manufacturer's  article  in  return  for  the  exclusive  agency 


EXPORT  HOUSES 


95 


in  the  country  where  the  merchant  is  operating.  Some  of  the 

most  famous  American  trademarked  articles  have  found  their 
way  into  foreign  countries  by  this  method.  A  certain  make 
of  typewriter  has  been  introduced  into  a  foreign  market  by  a 
somewhat  similar  plan  of  action.  In  this  sort  of  an  agreement 
a  clause  may  also  be  included  providing  that  the  manufac- 
turer and  merchant  equally  share  the  expenses  involved 
in  sending  a  traveling  salesman  through  the  territory  on 
soliciting  mission.  Whatever  sort  of  an  agreement  is 
reached,  it  must  be  remembered  that  the  export  merchant 
performs  a  useful  service,  and  is  competent  to  intelligently 
develop  sales  for  American  goods  in  foreign  markets.  The 
export  merchant  by  virtue  of  the  strength  of  his  organization 
may  be  in  a  pontion  to  handle  the  lines  of  several  manufac* 
turers,  which  is  an  ea>nomic  saving  in  itself.  On  the  other 
hand,  the  manufacturer  may  find  it  more  profitable  to  do  busi- 
ness direct.  This  he  can  do,  but  he  must  have  the  export 
machinery  to  do  it  with.  Either  method  has  its  advantages 
and  disadvantages.  The  decision  to  choose  one  or  the  other 
rests  with  the  manufacturer.  His  course  ia  determined  by  his 
own  individual  problems. 

Functions  of  the 

Export  Commissiom  Houu 

Theoretically,  the  export  commissum  house  merely  executes 

orders  in  the  United  States  for  a  foreign  importer,  receiving 
its  income  from  commissions  it  charges  to  these  clients  for 
services  rendered.  This  is  the  basic  principle  upon  which  the 
commission  house  <Mriginated.  With  the  growth  of  our  export 
trade,  however,  the  toBgort  commission  house  ceased  to  con- 
fine its  functions  to  executing  orders  for  foreign  buyers  and 
assumed  additional  burdens,  such  as  buying  and  selling  in 
special  instances  and  acting  as  agents  for  American  manufac- 
turers in  foreign  countries.  Of  the  2,000  or  over  export 
houses  in  the  principal  ports  of  the  United  States  the  majority 
of  them  may  be  properly  called  export  commisinon JhcMises. 

The  export  commission  house  begins  operations  by  inducing 
foreign  buyers  to  entrust  their  purchases  in  the  United  States 
with  the  firm.  In  order  to  gain  this  confidence  the  commis- 
sion house  must  prove  that  it  has  a  thorough  knowledge  of 


96 


EXPORTING  TO  THE  WORLD 


the  iCNirces  of  sapply  in  the  American  market  as  well  as  an 
expenence  in  the  purchase  of  merchandiae.   Moreover^  the 

commissmn  house  must  be  thoroughly  equipped  to  handle  all 
the  details  peculiar  to  the  export  trade.  In  other  words,  it 
must  be  an  export  house  in  every  sense  oi  the  word. 

Hm»  Export  Cmmmssum 

House  Executes  Orders 

An  order  comes  from  an  importer  in  South  Africa  for  an 
assortment  of  goods.  In  the  relations  existing  between  the 
export  commission  house  and  the  importer  it  is  already  under- 
stood that  a  certain  fixed  commission  will  be  due  the  former 
for  its  services  in  executing  the  order  and  in  obtaining  the 
lowest  prices  possible.  In  this  case  the  commission  house  will 
nsnally  ship  the  goods  to  its  cHent  on  an  i  o.  b.  basis»  i  e.»  f  ree 
on  board  ship.  Before  this  development  in  the  transaction  is 
reached,  however,  the  export  commission  house  will  have  sent 
its  buyer  out  to  find  the  goods.  It  is  possible  that  the  im- 
porter has  specified  the  manufacturers  from  whom  the  goods 
are  to  be  bought.  The  buyer  has  nothing  to  do  then  but  to 
go  to  these  manufacturers  and  obtam  them.  On  the  other 
hand,  the  importer  may  have  left  the  selection  of  other  items 
on  the  order  entirely  to  the  judgment  of  the  commission 
house.  In  this  case  the  commission  house  buyer  goes  to  the 
manufacturers  who  make  these  goods.  He  may  get  in  touch 
with  them  by  loddng  up  their  names  in  the  trade  directories, 
or  advertisements  in  the  export  trade  journals.  The  goods 
are  then  collected  together,  shipped  on  one  bill  of  lading  and 
after  the  importer  makes  his  payment  the  transaction  is  com- 
plete. The  services  rendered  have  been  the  buying  of  goods 
in  the  American  market,  the  taking  care  of  the  details  in  con- 
nection with  the  shipment,  the  booking  of  freight  qMce,  and 
the  obtaining  of  the  marine  insurance  if  the  importer  requests 
it.  Finally  the  commission  house  draws  against  the  importer 
for  the  cost  of  the  goods  and  other  charges,  as  well  as  the 
commission  for  services  rendered.  ^In  this  transaction  the 
conmiission  house  is  acting  purely  as  an  agent.  We  shaU  now 
see  how  it  may  act  as  a  principal. 

The  order  comes  from  the  same  importer  in  South  Africa. 
Instead  of  asking  the  commission  house  to  makes  purchases 


EXPORT  HOUSES 


97 


from  certain  manufacturers  or  in  the  open  market  the  im- 
porter this  time  requests  a  price  for  a  certain  list  of  goods, 
including  the  cost,  insurance,  freight  and  the  commission  or 
profit  that  the  commission  house  is  likely  to  recdve.  In  this 
case  the  export  commission  house  is  forced  to  quote  on  a 
c.  i.  f.  basis.  Also,  it  is  in  competition  with  other  commission 
houses  for  the  same  order.  Realizing  that  it  must  quote  as 
low  as  possible  in  order  to  obtain  the  business,  in  many  cases 
the  commission  house  will  eliminate  the  margin  of  profit  in 
its  price  to  the  importer,  and  depend  for  its  profit  on  its 
ability  to  buy  from  the  manufacturer  at  a  lower  price  than 
that  quoted  to  the  customer.  Or,  if  it  understands  the  freight 
situation,  it  may  obt^  space  at  a  lower  rate  than  that  quoted 
in  the  original  figure. 

Thus  it  will  be  seen  that  the  export  commission  house  dif- 
fers from  the  export  merchant  in  that  it  acts  merely  as  an 
agent  for  an  importer  in  a  foreign  country  executing  all  orders 
that  the  latter  may  issue.  It  ai^iroaches  the  functions  of  the 
export  merchant  only  when  it  engages  in  the  purchase  and 
sale  of  merchandise  on  a  c.  i.  f.  basis,  as  explained  in  the 
previous  paragraph.  On  the  other  hand,  the  export  merchant 
buys  on  his  own  responsibility  and  sells  where  he  can  obtain 
the  best  price  for  his  merchandise.  No  commissions  are  in- 
volved in  his  transactions.  He  fixes  his  own  margin  of  profit, 
and  that  is  included  in  the  price  to  the  customer. 

Sometimes  the  functions  of  the  manufacturer's  agent  are 
confused  with  those  of  an  export  commission  house.  The 
manufacturer's  agent  acts  purely  in  behalf  of  the  principal,  as 
the  name  implies.  Orders  coming  to  the  agent  must  go  to 
the  manu^cturer  he  represents,  while  the  pommission  house 
is  not  bound  to  patronize  any  particular  manufacturer  unless 
it  is  instructed  to  do  so  by  the  foreign  client. 

Organization  of  the 
EjFfort  Commissiou  Haust 

The  export  commission  house  may  be  found  in  aOiy  large 

American  seaport.  From  this  point  a  staff  consisting  of  an 
executive,  buyers,  correspondents,  shipping  clerks,  bill  or 
auditing  clerks,  invoice  clerks,  and  bookkeepers  direct  the 
business  that  may  be  eictended  to  all  sections  of  the  world. 


EXPORTING  TO  THE  WORLD 


l^he  number  of  employes  and  executives  on  the  payroll  is 
detennined  by  the  strength  of  the  house's  finances  as  well  as 
^le  volume  of  btuiness  it  conducts. 

In  the  large  organizations,  where  several  countrtei  arc  in- 
volved, departments  are  created  to  handle  the  business  al  each 
individual  country.  At  the  head  of  each  department  there 
may  be  a  buyer  whose  functions  are  to  understand  the  needs 
ol  the  foreign  country  for  which  he  is  to  make  purchases,  as 
well  as  to  keep  in  touch  with  foreign  buyers  by  frequent  visits 
to  their  territory,  or  by  correspcmdence.  When  buyers  arrive 
in  Ais  country  to  look  over  the  market  it  is  the  duty  of  the 
buyer  for  the  commission  house  to  make  their  acquaintance. 
In  a  business  where  technical  knowledge  is  required  the  com- 
mission house  may  have  on  its  payroll  an  expert  buyer  who 
has  a  thorough  technical  knowledge  of  the  articles  to  be  pur- 
chased. It  often  happens  that  a  commission  house  leaves  the 
I>U3ring  to  the  heads  of  the  departments,  whose  knowledge  of 
the  sources  of  supply  may  be  adequate  for  intelligent  work. 

The  buyer's  aim  is  to  obtain  the  lowest  quotation,  and  to 
make  as  shrewd  a  bargain  as  possible.  The  intelligent  con- 
duct of  his  assignment  depends  on  his  knowledge  of  the 
scmrces  of  supply  and  the  prices  offered  by  competing  manu- 
facturers. Agents  of  the  latter  frequently  make  the  rounds  of 
the  commission  houses  soliciting  business.  Buyers  as  well  as 
heads  of  departments  are  thus  able  to  keep  in  close  touch  with 
competing  prices  as  well  as  new  articles  put  on  the  market 
lor  sale. 

Foreign  Branch  Office  of 

Export  Commission  House  *  t 

r 

When  the  volume  of  business  justifies  it  the  export  commis- 
sion house  will  establish  branches  in  certm ^commercial  cen- 
ters abroad.  They  are  not  to  be  found  everywhere,  however. 
Only  those  markets  that  have  been  developed  sufficiently  to 
justify  special  effort  are  selected  as  suitable  places  for  branch 
offices.  Usually  these  branches  are  in  charge  of  an  executive 
trained  in  the  home  office.  Cases  are  known  where  natives  are 
in  charge.  Whoever  the  branch  manager  may  be,  it  is  obvious  that 
he  must  be  given  a  free  rein  in  the  conduct  of  his  duties.  He 
is  the  man  in  the  field  and  knows  more  about  Hm  ecMiditkwa 


EXPORT  HOUSES 


99 


and  requirements  than  his  superiors  at  home.  His  employers 

have  selected  him  because  of  the  confidence  in  his  judgment. 
Therefore,  when  he  assumes  his  duties  of  foreign  branch  man- 
ager they  must  rely  on  his  judgment.  It  would  seem  that  the  suc- 
cessful conduct  of  a  foreign  branch  office  should  be  left  en- 
tirely to  the  foreign  branch  manager,  yet  the  powers-that-be 
at  home  often  endeavor  to  dictate  certain  impossible  activities 
without  even  consulting  the  man  on  the  ground.  In  order  to 
obtain  the  best  that  is  possible  out  of  a  foreign  branch  office 
the  export  commission  executive  at  home  should  be  satisfied 
merely  with  the  supervision  of  the  general  details  of  the  over- 
seas business,  and  leave  the  matter  of  obtaining  restdts  to  the 
man  upon  whom  he  originally  placed  his  confidence.  If  he 
fails  to  "deliver"  then  he  has  the  power  and  authority  to  send 
him  home. 

The  advantages  of  a  foreign  branch  office  are  obvious.  In 
the  first  place  it  puts  the  personal  touch  in  the  foreign  field. 
This  is  very  important  Also,  through  the  branch  office  ^  home 

people  are  constantly  kept  in  touch  with  changing  commercial 
conditions  and  markets.  A  better  knowledge  of  the  financial 
standing  of  the  customers  is  obtained.  The  development  of 
the  market  is  expedited.  When  there  are  new  goods  to  intro- 
duce the  foreign  branch  office  is  in  a  position  to  do  this  i»op- 
erly  and  efficiently.  , 

Foreign  agents  of  the  export  commission  house  operate  in 
much  the  same  way  as  agents  for  the  export  merchant.  They 
usually  trade  under  their  own  name  and  may  have  various 
sorts  of  arrangements  for  the  representation  of  American 
lines. 

Merchandise  of  the 
Export  Com9tUssion  Man 

In  theory  the  export  commission  house  handles  all  sorts  of 
merchandise.  Some  commission  houses,  however,  specialize 
in  certain  lines*  such  as  drugs,  chemicals,  machinery,  hard- 
ware,  clothing  or  automobiles.  There  is  no  set  rule  of  a^on. 
Moreover,  an  export  commission  house  may  have  ah  agency 
for  an  automobile  in  South  America,  while  in  Australia  its 
line  may  be  pianos.  It  often  happens  that  an  exclusive  agency 
for  a  certain  article  does  oot  ioUow  the  export  commissioa 


100 


EXPORTING  TO  THE  WORLD 


house  all  over  the  world.  Neither  are  its  lines  identically  the 
same  in  every  country  it  reaches.  An  American  export  com- 
mission  house  deals  in  hardware  in  one  section  of  the  world, 
in  cotton  piece  goods  in  another^  and  in  agricultural  machinery 
in  still  another. 

The  d^ee  of  specialization  b  generally  determined  by  the 
volume  of  business  that  the  export  commission  house  may  be 
able  to  work  up  in  a  certain  line  in  its  overseas  trade.  When 
the  commission  house  reaches  that  point  where  it  can  give 
such  specialized  attention  as  the  sale  of  a  certain  commodity 
may  justify  it  will  then  be  in  a  positicm  to  give  more  efficient 
service. 

In  every  market  different  customs  regulations,  language, 
conditions,  etc.,  may  be  encountered  by  the  export  conunission 
house.  If  its  program  is  so  ambitious  as  to  endeavor  to  cover 
tim  entire  worid  it  will  readily  be  seen  that  a  laige  staff  com- 
posed of  experienced  men  who  understand  the  various 
methods  of  handling  shipments  for  individual  markets  will 
be  necessary.  Unless  the  business  is  of  such  volume  as  to 
justify  a  tremendous  organization  the  export  commission 
house  will  do  well  to  confine  itself  to  certain  territories  where 
it  will  not  be  so  difficult  for  the  smaller  staff  to  keep  in  touch 
with  conditions  as  well  to  thoroughly  master  die  details 
peculiar  to  those  markets. 

How  Commission  House 
DgvHafs  Its  Saks 

In  developing  business  the  export  commission  house  may 
employ  salesmen  who  are  sent  either  from  the  home  office  or 
from  the  branches  abroad.  Or  business  may  be  developed 
by  correspondence  and  advertising.  Obviously,  the  first 
method  is  the  best,  as  has  already  been  indicated  in  a  previous 
cfuipter. 

In  his  operations  the  salesman  may  carry  a  large  number  of 
samples,  which  he  displays  at  the  branch  office  of  the  concern. 
Ordinarily  he  works  out  from  this  branch  in  the  country  to 
which  he  has  been  assigned.  Some  commission  houses,  how- 
ever, send  their  salesmen  to  different  zones.  At  the  end  of 
the  tour  these  salesmen  return  to  the  home  office  to  make 
their  reports. 


r 


EXPORT  HOUSES  101 


It  has  been  shown  in  this  chapter  how  the  export  commis- 
sion house  keeps  in  close  touch  with  buyers  for  foreign  houses 
who  may  arrive  in  this  country  to  make  their  purchases.  The 
names  of  these  buyers  may  be  obtained  from  the  newspapers 
or  trade  organizations  existing  in  the  various  so^orts. 

Routine  of  Commission 
House  m  Handlmg  Order 

The  handling  of  an  order  in  an  export  commission  house  is 

something  like  this: 

The  order  is  for  an  assortment  of  stationery.  The  importer 
may  have  ^[ledfied  the  names  of  the  manufacturers  from  whom 
the  goods  are  to  be  purchased.  In  this  case,  the  commission 
house  buyer  will  have  to  look  up  these  manufacturers.  Or, 
the  order  may  empower  the  commission  house  to  use  its  own 
judgment.  If  such  is  the  case  the  commission  house  will 
send  out  inquiries  to  the  leading  manufacturers  for  the  lowest 
possible  quotation  on  the  goods.  Before  the  order  is  given 
serious  attention,  however,  the  credit  standing  of  the  foreign 
customer  is  investigated.  In  old-established  commission  houses 
the  matter  of  deciding  whether  or  not  the  importer  shall  re- 
ceive credit  is  a  simple  one,  as  they  know  the  financial  status 
cf  their  customers  through  long  experience,  as  well  as  the 
methods  of  obtaining  reliable  credit  information  concerning 
new  customers  who  send  their  orders  to  be  executed  in  the 
United  States. 

The  matter  of  credit  to  the  customer  determined,  the  buyer 
now  receives  the  order  for  execution.  In  the  meantime  in- 
structicms  as  to  shipment,  insuring  and  financing  are  given  to 
the  proper  departments.  All  information  regarding  these  in- 
structions may  be  found  in  the  card  index,  where  it  was  en- 
tered when  the  order  was  originally  received. 

The  buyer  now  proceeds  with  the  purchase  of  the  goods. 
He  may  know  beforehand  ixom  what  manufocturers  he  can 
obtain  the  lowest  prices.  Possibly  it  may  be  necessary  for 
him  to  go  out  in  the  open  market  to  obtain  the  most  satisfac- 
tory quotations.  Once  having  received  these  quotations  from 
the  various  plants  the  buyer  is  now  ready  to  place  his  orders. 

When  the  orders  are  placed  the  buyer  is  practically  finished 
wi4i     phase  of  die  woric  ia  oomiectkm  wt^  the  order.  The 


103  EXPORTING  TO  THE  WORLD 


shippiiig  dark  must  now  kttp  m  touch  with  the  ah^mient 
from  the  factory  to  see  that  there  is  no  delay  in  placing  the 
goods  on  the  ship  at  the  proper  time.  In  the  meantime  he 
must  engage  space.  When  the  steamer  prepares  to  load  he 
must  instruct  the  iactoiy  to  ship  the  goods  to  the  port 

The  bookkeeping  department  handles  the  bills  for  merchant 
dise  sent  by  the  manufacturers.  It  must  prepare  to  make  pay- 
ments in  accordance  with  the  terms  of  sale.  It  also  carefully 
compares  the  prices  and  items  on  the  manufacturers'  bills 
with  the  memorandum  of  the  order  placed  by  the  buyer  to 
see  that  no  mistakes  have  been  made.  Once  satisfied  tluit  the 
bills  are  correct  it  then  prepares  to  make  payment. 

A  draft  of  the  bill  of  lading  and  the  manufacturer's  bill  are 
now  turned  over  to  the  invoicing  department  so  that  it  can 
make  out  the  documents  peculiar  to  the  shipment.  The  neces- 
sary information  concerning  the  method  of  making  out  the 
dntft  and  the  taking  out  of  marine  insurance,  etc.,  will  be 
found  on  the  card  index  which  the  inToicing  department 
refers  to. 

Whed  the  invoice  is  completed  the  finance  department  is 
given  the  draft  and  other  necessary  papers  which  it  takes  to 
the  bank.  Payment  is  recdved  in  accordance  with  the  tenna 
arranged  wi^  the  foreign  buyer.  The  methods  of  financing 

a  shipment  will  be  more  fully  explained  in  a  subsequent 
chapter. 

The  shipping  derk's  duties  in  connection  with  this  particu- 
lar diipment  end  when  he  checks  up  on  the  freight  chaigesy 
and  makes  payment  to  the  steamship  company. 

Advantages  of  Export 
Commission  Houses 

The  export  commission  house  is  the  intermediary  between 

the  source  of  supply  and  the  market.  A  great  percentage  of 
American  foreign  trade  is  transacted  through  the  export  com- 
mission house.  There  is  a  reason.  The  export  commission 
house  is  equipped  to  handle  foreign  business  for  American 
manufacturers.  It  has  built  up  a  selling  machine  in  various 
foreign  countries.  It  has  gathered  to  its  staff  experts  in  buy- 
ing and  selling;  experts  in  handling  export  documents;  ex- 
perts in  preparing  and  financing  shipments;  experts  who 


r 


EXPORT  HOUSES 


108 


understand  the  conditions  in  foreign  countries,  and  who  know 
the  requirements  and  peculiarities  of  the  different  fields.  Not 
only  one,  but  any  number  of  manufacturers  may  benefit  from 
an  organization  of  this  sort,  and  yet  avoid  all  responsibility 
and  risk  in  shipping  the  goods  to  foreign  countries.  The 
export  commission  house  is  a  professional  salesman  and  dis- 
tributor of  American  products.  It  is  supposed  to  know  its 
business.  It  has  developed  its  business  on  the  basis  of  its 
efficiency  and  success  in  the  past.  The  manufacturer  who  is 
seeking  a  foreign  market  and  yet  hesitates  against  building 
an  export  department  in  his  own  organization  naturally  will 
look  for  somebody  with  a  professional  knowledge  of  selling  in 

y foreign  markets.  The  export  commission  house  supplies  that 
knowledge. 

Field  of  Commission 
Houses  Is  LimUed 

In  the  use  of  export  commission  houses  for  the  development 
of  foreign  trade,  however,  it  is  necessary  that  the  manufac- 
turer proceed  with  caution.  It  must  be  remembered  that  export 
commission  houses  do  not  "cover  the  entire  world.  Some  com- 
mission houses  dominate  in  certain  fields,  and  some  in  others. 
No  commission  house  is  all  powerful  in  every  section  in  which 
it  is  established.  Some  houses  dominato  a  certain  field  in  the 
machinery  line,  others  in  textiles  and  still  others  in  office  sup- 
plies, etc.  It  would  not  be  good  business  for  a  manufacturer 
to  turn  over  an  agency  to  a  commission  house  without  first 
inquiring  into  the  situation  in  the  countries  in  which  he  wishes 
to  sell  his  goods.  There  is  considerable  truth  in  the  state- 
ment that  the  great  flood  of  criticism  that  has  been  directed 
against  commission  houses  has  been  provoked  from  misunder- 
standings on  the  part  of  the  manufacturer  as  to  the  exact 
functions  that  the  commission  house  to  which  he  has  been 
attached  can  efficiently  perform,  and  the  facilities  it  can  offer. 

The  commission  house  has  its  limitations.  It  cannot  be 
expected  to  give  the  same  thought  and  attention  in  tfie  devel- 
opment of  a  market  for  a  specific  article  that  the  manufac- 
turer would  naturally  give  owing  to  the  various  lines  that  it 
undertakes  to  handle.  It  must  of  necessity  scatter  its  shot. 
Again,  as  an  exclusive  agent  for  an  American  manufacturer 


104  EXPORTING  TO  THE  WOiaj> 


it  may  not  be  able  to  induce  certain  dealers  to  buy  the  manu- 
facturer's articles  when  others  of  a  similar  character  may  be 
purchased  from  other  commission  houses  with  which  the 
dealer  has  transacted  business  for  many  years.  Foreign  buy- 
ers ^eler  to  jj^ace  their  orders  through  one  house  in  order  to 
avoid  considerable  red  tape.  They  do  not  like  to  scatter  their 
indents.  Therefore,  if  a  manufacturer  gives  a  commission 
house  the  exclusive  agency  in  a  certain  field  he  merely  nar- 
rows the  market  for  his  product 

CommUsUm  Homn 
Ham  Campkmi 

There  has  been  considerable  criticism  on  the  part  of  com- 
mission houses  against  the  demands  made  upon  them  by  the 

manufacturers.  It  is  claimed  that  the  manufacturers  refuse 
to  extend  adequate  credits  to  the  commission  houses,  which 
the  latter  often  charge  as  being  beyond  reason.  In  his  ad- 
dress before  the  Sixth  National  Foreign  Trade  Convention  in 
Chicago^  William  H.  Douglass,  president  of  Arkdl  &  Doug- 
lass of  New  Yorky  had  this  to  say :  "The  existing  relationship 
between  the  manufacturer  or  supplier  of  goods  and  the  ex- 
porter should  be  thoroughly  gone  into.  It  cannot  be  truth- 
fully stated  that  it  is  overcordial  today.  This  is  due  to  the 
rules  formulated  by  the  manufacturers  without  regard  to  the 
interest  or  necessities  of  the  exporter.  Dealing  with  one 
alone,  the  pa3rment  system,  all  exporters  will  agree  it  weighs 
heavily  on  their  shoulders.  Manufacturers  today  have  placed 
the  export  business  entirely  on  a  cash  basis.  They  have  a 
system  of  small  discounts  for  cash,  with  payment  at  sight, 
five  or  ten  days,  and  while  they  know  that  these  discounts 
must  be  granted  to  the  buyer  abroad,  they  are  indifferent  to 
the  position  of  the  exporter,  and  do  not  wish  to  allow  the 
specials  if  there  is  the  slightest  infringement  of  their  pay- 
ment dates.  They  sell  in  their  domestic  trade  on  long  terms 
to  parties  frequently  of  little  or  no  standing,  dating  their  bills 
several  months  ahead  and  giving  sixty  to  ninety  days'  time 
lor  payment;  and  yet  they  penalize  the  exporter  by  rules 
which  require  him  to  pay  them  generally  long  before  he  can 
ship  the  goods  abroad;  and,  furthermore,  they  expect  the 
buyer  on  his  part  to  give  credit  abroad  when  he  does  not  re- 
ceive it  at  home*" 


I 


EXPORT  HOUSES  105 

Mr.  Douglas  clearly  sums  up  the  advantages  of  the  commis- 
sion house  with  the  following  statement:  "As  a  result  of 
the  war,  burdensome  laws  and  restrictions  will  undoubtedly 
be  established,  and  such  laws  already  exist  in  South  America 
and  elsewhere.  Preferential  tariffs  will  be  granted,  partial  or 
total  exclusion  of  our  goods  may  be  adopted  as  a  policy,  or 
again  rules  may  be  established  of  such  a  restrictive  character 
as  to  practically  prevent  the  importation  of  our  goods.  Our 
merchants  cannot  controvert  or  change  such  regulations,  as 
they  are  international  questions;  and  our  government  must 
be  alive  and  firm  in  preventing  unjust  and  unfair  discrimina- 
tion by  any  nation  against  our  commerce.  American  goods 
must  have  the  open  door  on  an  equal  basis  with  any  other 
nation's  goods  to  every  country  in  the  world. 

'The  powerful  manufeicturer  who  has  handled  export  busi- 
ness for  many  years  is,  naturally,  by  acquired  experience,  able 
to  take  reasonable  care  of  his  interests,  but  to  the  thousands 
of  smaller  manufscturers  who  are  now  entering  the  field,  it 
may  be  well  to  say  there  are  many  pitfalls,  and  great  care 
should  be  used  to  take  the  right  road.  Exclusive  agency  ar- 
rangements either  with  American  or  foreign  firms  should  be 
avoided  unless  the  goods  are  of  a  character  that  require  this 
means  of  exploitation.  Hundreds  of  foreigners  are  touring 
the  country,  offering  their  services  on  a  salary  or  a  commis- 
sion basis,  claiming  they  can  do  wonders  if  given  rights  in 
their  home  countries;  but  it  is  well  to  avoid  them,  or  at  least 
satisfy  yourselves  as  to  their  credentials.  New  companies  with 
new  connections  abroad  are  willing  to  accept  liberal  retainers 
to  try  to  do  something  which  the  manufacturer  can  better  do 
himself,  or  arrange  through  those  who  have  the  proper  status. 
Avoid  too  large  a  grant  of  territory  abroad  to  any  one  house, 
as  it  it  not  desirable.  Direct  trade  is  unwise  at  first,  if  not 
always.  Because  travelers  are  sent  abroad  to  introduce  goods 
is  not  a  reason  why  the  business  must  be  done  direct,  and  not 
through  the  regular  exporter.  Cash  for  goods  from  the  ex- 
porter is  better  dian  financing  on  the  buyer  thousands  of  miles 
away  at  90  or  120  days.  Drafts  have  an  unfortunate  way  of 
coming  back  unpaid  quite  frequently." 


loe  EXPORTING  TO  THE  WORLD 


Future  of  Expert 

Commission  Houses 

It  is  doubtful  if  the  export  commission  houses  can  ever  be 
eliminated  in  foreign  trade.  As  a  matter  ol  fact  it  is  not 
desirable  that  such  a  vital  machine  to  tiie  development  and 
extension  of  our  foreign  business  be  scrapped.  The  commis- 
sion house  will  always  be  found  in  some  region  where  it  is 
tmprofitable  for  the  manufacturer  to  reach  single  handed. 
The  commission  house  will  always  handle  some  products  that 
will  be  more  convenient  for  it  to  handle  than  any  other  agency. 
Mr.  G.  £.  Smith,  at  one  time  president  of  the  American  Manufac- 
turers' Association,  in  explaining  the  future  of  the  export  com- 
mission house  before  the  Sixth  National  Foreign  Trade  Conven- 
tion in  Chicago  said :  "We  can  thank  our  export  houses,  with 
few  exceptions,  for  whatever  prestige  America^  goods  en- 
joyed in  foreign  markets  before  the  war.  They  were  the  pio- 
neers in  finding  a  demand  for  ottr  products  and  in  meeting 
that  demand  where  they  found  it.  Our  foreign  trade  in  staple 
goods  today  is  largely  the  result  of  earnest  and  effective  work 
by  these  export  houses,  and  I  believe  that  a  large  field  exists 
and  will  exist  in  which  they  will  continue  to  handle  business 
efficiently  and  more  intelligently  than  the  producer 
himself. 

"Outside  of  raw  and  semi-raw  materials,  however,  the  fu- 
ture of  American  foreign  trade  lies  with  her  manufactured 
specialties.  Machinery,  special  tools,  labor-saving  devices, 
the  products  of  American  ingenuity  and  American  Victories 
are  destined,  I  believe,  to  fmn  the  great  bulk  of  the  new  trade 
which  awaits  our  exporters.  And  it  seems  to  me  to  be  a 
truism  that  abroad,  as  well  as  at  home,  no  one  can  sell  these 
products  as  well  or  as  successfully  as  the  man  who  makes 
them.  * 

''The  successful  sale  of  these  articles  demands  two  tUngs, 
which  can  only  be  afforded  by  the  manufacturer  himself.  The 

first  of  these  is  the  creation  of  an  intelligent  demand  for  the 
article.  The  second  is  provision  for  service  after  the  article 
has  been  bought  and  is  being  used" 


CBApnat  IX 


FOREIGN  SALES  ORGANIZATIONS 

Advantages  of  local  foreign  sales  agent — ^Different  func- 
tions OF  LOCAL  POBBIGN  SALES  AGBNTS—* MANUFACTURER'S  AR- 
KANGKMSNTS  WITH   LOCAL   FOREIGN    SALES  ACSNT»— FOttQGN 

BRANCHES  AS  SELUNG  AGENCIES 

The  sales  agent  selling  American  merchandise  in  foreign 
countries  apparently  is  an  indispensable  being.  The  number 
of  these  local  foreign  sales  agents  is  gradually  increasing  as 
American  manufacturers  are  spreading  their  activities  to 
reach  the  most  important  sections  of  the  world.  These  sales 
agents  are  not  hard  to  find.  They  thrive  in  great  numbers  in 
^  principal  markets  of  the  worid  and  the  records  show  that 
a  great  number  of  them  have  performed  their  functions  with 
satisfaction. 

The  local  foreign  sales  agent  serves  in  the  same  capacity  as 
the  f ore^  branch  office  only  he  orders  and  sells  on  his  own 
account,  finances  all  orders  and  depends  on  the  volume  of  the 

business  he  has  worked  up  for  his  own  profits.  The  agent's 
office  or  store  serves  as  headquarters  for  stocks  or  spare  parts 
so  that  customers  may  be  given  service  in  connection  with 
their  purchase  ol  goods  of  a  technical  character.  It  is  not 
uncommon  for  the  sales  agent  to  co-operate  with  ^  manu- 
facturer in  the  promotion  of  the  latter^s  products. 

Advantages  of  Local 
Fanigm  SaUs  Ageni 

The  manufacturer  who  sallies  forth  to  conquer  foreign  mar- 
kets may  be  able  to  cut  his  preliminary  troubles  in  half  by 
connecting  with  some  responsible  local  foreign  sales  agent 
who  may  already  have  an  adequate  and  well  known  organiza- 
tion in  the  field.  Once  the  agent  is  given  an  exclusive  con- 
tract hia  organisation^  which  may  extend  to  all  parts  of  the 

m 


108  EXPORTING  TO  THE  WORLD 


country  in  which  he  is  located,  starts  working  for  the  fnanu* 

facturer  at  home,  and  his  products.  The  success  in  the  sale 
oi  his  goods  will  depend  very  much  on  the  co>operation  that 
he  eactends  to  his  representative  in  the  field.  A  live  agent, 
r^rdless  of  the  nnmber  of  non-competing  lines  he  handles, 
may  do  wonders  for  his  principal  if  the  proper  sort  of  co- 
operation is  extended  by  the  latter. 

Needless  to  say,  the  skiUlul  attention  of  a  local  sales  agent 
h  invaluable  where  personal  attention  of  a  scientific  and  tech* 
nical  character  is  involved.  A  manufacturer  producing  an 
article  requiring  mechanical  knowledge  would  find  it  difficult 
to  market  it  unless  he  were  fully  prepared  to  render  a  certain 
amount  of  service.  No  customer  would  want  to  wait  from 
six  to  ten  weeks  for  the  shipment  of  an  extra  part  of  an  article 
which  he  could  not  obtain  in  his  own  cotmtry.  An  agent  well 
supplied  with  these  i^are  parts  cao  easily  eliminate  such 
delaja. 

Local  Foreign  Sales  Agent 
May  Develop  Business 

The  local  foreign  sales  agent— if  he  is  a  live  one— can 
alwajrs  be  depended  upon  to  take  advantage  of  every  oppor- 
tunity to  turn  over  a  deal  for  his  principal.  He  is  in  daily 
touch  with  conditions,  with  the  launching  of  new  enterprises 
of  an  industrial  character,  and  with  the  activity  of  his  com- 
petitors. As  a  salesman  and  a  developer  of  new  business  he 
will  never  lose  an  opportunity  to  sell  the  goods  for  which  he 
is  the  exclusive  representative.  Co-operating  with  the  manu- 
facturer he  receives  and  distributes  samples  and  catalogues 
and  other  literature  that  is  aimed  to  advertise  the  line  The 
manufacturer's  confidence  in  his  foreign  agent  established, 
no  time  should  be  wasted  in  giving  him  full  support  in  the 
development  of  business.  The  manufacturer  should  at  all 
times  co-operate  to  the  fullest  extent  He  should  consult  with 
him  on  matters  involving  sales-promotion  work.  He  should 
keep  his  agent  well  supplied  with  advertising  literature  to 
mail  to  prospective  customers.  An  occasional  visit  on  the  part 
of  the  manufacturer  or  his  representative  should  be  made,  if 
possible. 


FOREIGN  SALES  ORGANIZATIONS  lOd 


Sates  Agent  May 

Obtain  Credit  Data 

The  policy  of  appointing  local  foreign  sales  agents  has  an  ad- 
vantage also  in  the  matter  of  obtaining  credit  information.  A 
good  sales  agent  keeps  in  dose  touch  with  the  bankers  of  the  com- 
munity  as  well  as  with  other  commission  agents,  credit  agen- 
cies and  collection  firms.  Such  information  is  occasionally 
asked  the  sales  agent.  In  exchange  for  this  information 
the  sales  agent  obtains  a  very  good  idea  of  the  status  of  a 
great  number  of  merchants,  which  is  of  inestimable  value  to 
the  manufacturer. 

Trying  to  settle  some  misunderstanding  by  mail  involves 
considerable  time  and  bother.  Even  if  correspondence  is 
resorted  to  there  is  the  danger  that  the  letter  will  be  mis- 
understood, and  instead  of  soothing  the  feelings  of  the  man 
at  the  other  end  it  is  more  than  likely  to  increase  the  aggra- 
vation. There  is  nothing  like  having  a  good  man  on  the 
ground  td  smooth  over  these  matters  and  to  adjust  or  com- 
promise claims  whenever  they  arise,  or  to  obtain  settlement 
from  slow  pays.  A  good  agent  is  not  only  in  a  position  to 
handle  these  delicate  situations,  but  his  personality  may  lead 
to  the  restoration  of  complete  harmony  between  manufacturer 
and  customer.  This  is  something  that  a  letter  hardly  ever 
does. 

The  Meammg  of  a 
*'Del  Creder^  Agent 

When  a  local  foreign  sales  agent  assumes  part  or  all  the 
risks  involved  in  the  selling  of  goods  to  local  customers  he  is 
generally  called  a  ^*dtl  credere"  agent.  A  "del  credere"  agent 
usually  guarantees  the  payment  of  goods,  but  in  return  he 
may  ask  for  a  much  larger  commission,  which  is  called  a 
"del  credere"  commission. 

''In  case  of  need"  is  a  phrase  used  by  manufacturers  to 
notify  bankers  of  the  name  and  address  of  an  agent  at  the 
other  end  who  may  be  entrusted  to  take  care  of  the  manufac- 
turer's interests  in  connection  with  protested  drafts,  or  with 
the  diq^osal  of  the  goods  to  other  merchants. 


110  EXPORTING  TO  TH£  WORLD 


Merchant  Agents 
Sole  Distributors 

Sometimes  a  manufacturer  may  i^^pofnt  a  merchant  as  his 
sole  distributor  in  a  certain  territory.  The  goods  are  actually 
sold  to  the  merchant  and  he  is  ordinarily  supposed  to  guar- 
antee a  certain  volume  of  business  in  return  for  the  exclusive 
rights  for  his  territory.  The  advantages  of  having  a  merchant 
as  aoLc  distributor  are  many.  The  manufacturer  will  carry 
onty  one  account  on  his  books  in  this  instance.  He  need  not 
bother  about  credit  risks  in  which  many  customers  are  in- 
volved. His  risk  is  reduced  to  one  account— that  of  the  mer- 
chant. Again,  the  merchant  may  have  developed  a  strong 
organization  in  his  territory  which  will  be  of  great  value  to 
the  manufacturer.  As  a  purchaser  of  the  manufacturer's 
goods  outr^ht  the  merchant  will  show  considerable  interest 
in  their  sale.  He  must  depend  upon  the  turnover  lor  his 
profits.  There  is  this  danger  in  the  appointment  of  merchant 
agents  as  sole  distributors,  however:  In  a  majority  of  cases 
the  merchant  agent's  competitors  conduct  retail  establish- 
ments, and  he  knows  that  he  cannot  sell  his  goods  to  these 
competitors.  His  field  is  narrowed.  It  is  up  to  him,  then,  to 
find  customers  who  are  not  attached  to  his  wholesale  com- 
petitors. The  motives  of  a  merchant  agent  should  also  be 
closely  looked  into.  Often  a  merchant  agent  obtains  the  ex- 
clusive agency  for  an  article  merely  to  suppress  it.  This  is 
done  in  order  that  other  competitive  lines  for  which  he  is 
sole  agent  and  which  offer  larger  sales  or  profits  may  have  a 
dear  field. 

How  Local  Foreign  Sales 
Agents  Are  Selected 

It  has  been  remarked  quite  often  that  Americans  only 

should  be  in  charge  of  the  foreign  sales  of  an  American  manu- 
facturer. The  basis  for  this  statement  lies  in  the  belief  that 
lordgners  are  untrustworthy,  and  that  they  will  always  give 
the  American  article  the  worst  of  it  when  it  is  competing 
with  an  article  made  in  some  other  favored  country.  There 
may  be  some  cases  where  foreigners  have  endeavored  to  give 
the  goods  of  their  country  eveiy  possible  advantage  over 


INTENTIONAL  SECOND  EXPOSURE 

.,  ,   »  mjip  II  ■!  II   111    .  111  I       iiiKii  mmum 


110  EXPORTING  TO  THE  WORLD 

Merchant  Agents 

Sole  Distributors 

Sometimes  a  manufacttirer  may  appoint  a  merchant  as  his 
sole  distributor  in  a  certain  territory.  The  goods  are  actually 
sold  to  the  merchant  and  he  is  ordinarily  supposed  to  gfuar- 

antee  a  certain  volume  of  business  in  return  for  the  exclusive 
rights  for  his  territory.  The  advantages  of  having  a  merchant 
as  sole  distributor  are  many.  The  manufacturer  will  carry 
only  one  account  on  his  books  in  this  instance.  He  need  not 
bother  about  credit  risks  in  which  many  customers  are  in- 
volved. His  risk  is  reduced  to  one  account — ^that  of  the  mer- 
chant. Again,  the  merchant  may  have  developed  a  strongf 
organization  in  his  territory  which  will  be  of  great  value  to 
the  manufacturer.  As  a  purchaser  of  the  manufacturer's 
goods  outright  the  merchant  will  show  considerable  interest 
in  their  sale.  He  must  depend  upon  the  turnover  for  his 
profits.  There  is  this  danger  in  the  appointment  of  merchant 
agents  as  sole  distributors,  however:  In  a  majority  of  cases 
the  merchant  agent's  competitors  conduct  retail  establish- 
ments, and  he  knows  that  he  cannot  sell  his  goods  to  these 
competitors.  His  field  is  narrowed.  It  is  up  to  him,  then,  to 
find  customers  who  are  not  attached  to  his  wholesale  com- 
petitors. The  motives  of  a  merchant  agent  should  also  be 
closely  looked  into.  Often  a  merchant  agent  obtains  the  ex- 
clusive agency  for  an  article  merely  to  suppress  it.  This  is 
done  in  order  that  other  competitive  lines  for  which  he  is 
sole  agent  and  which  offer  larger  sales  or  profits  may  have  a 
clear  field. 

How  Local  Foreign  Sales 
Agents  Are  Selected 

It  has  been  remarked  quite  often  that  Americans  only 
should  be  in  charge  of  the  foreign  sales  of  an  American  manu- 
facturer. The  basis  for  this  statement  lies  in  the  belief  that 
foreigners  arc  untrustworthy,  and  that  they  will  always  give 
the  American  article  the  worst  of  it  when  it  is  competing 
with  an  article  made  in  some  other  favored  country.  There 
may  be  some  cases  where  foreigners  have  endeavored  to  give 
the  goods  €»f  their  country  every  possible  advantage  over 


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FOREIGN  SALES  ORGANIZATIONS  111 


American-made  products,  but  this  is  the  exception  and  not 
the  rule.  Foreign  sales  agents  are  out  for  the  money  as  a 
general  rule.  If  they  can  make  more  profits  from  the  sale 
of  an  American  product  than  they  can  from  an  article  shipped 
from  their  natiTe  country  they  will  take  the  agency  of  the 
former  in  preference  to  the  latter.  Too  many  cases  are  known 
where  Germans  have  successfully  acted  as  agents  for  English 
goods,  and  English  for  American  goods,  and  even  Japanese 
for  American  goods,  to  take  such  statements  too  seriously. 

The  first  consideration  in  the  selection  of  an  agent  is  his 
character  and  reputation  in  the  community  in  which  he  is 
doing  business.  As  in  the  case  of  the  traveling  salesman, 
the  customer  judges  the  home  office  by  the  character  of  the 
representative  in  the  field. 

The  fact  that  the  agent  has  been  long  established  and  is  a 
powerful  factor  in  the  market  should  not  weigh  too  heavily 
in  his  favor.  He  may  take  the  exclusive  agency  and  give  it 
mediocre  attention,  whereas  a  young  institution  desirous  of 
growing  may  want  that  very  article  which  the  manufacturer 
offers  to  increase  its  business. 

Manufacturers  often  entrust  then-  traveling  salesmen  to 
appoint  agents  in  the  countries  through  which  the  former 
travel.  These  agents  should  be  able  to  produce  letters  of 
recommendation  from  other  manufacturers  for  whom  they 
have  operated,  and  other  data  as  information  for  the  manu- 
facturer. The  manufacturer  must  first  satisfy  himself  that 
he  can  place  implicit  confidence  in  his  foreign  representative. 
Once  having  satisfied  himself  on  this  score,  he  must  be  pre- 
pared to  extend  all  the  co-operation  that  that  confidence 
justifies. 


Bmsiness  Affmgnmnit 
IViik  Sflfef  Ageni 

The  contract  with  the  local  foreign  sales  agent  should  be 
prepared  caref  uUy.  It  should  be  caref uUy  written  so  that  dis- 
agreeable controversies  may  be  avoided.  The  following  points 
should  be  mcluded  in  a  contract  with  a  local  foreign  sales 
agent:  (a)  Duties  of  agent;  (b)  authority;  (c)  terms  upon 
which  he  is  to  do  business  for  his  principal;  (d)  to  what  ex- 
tent is  the  principal  liable  and  responsible?  (e)  the  territory 


m  EXPORTING  TO  THE  WORLD 


over  which  agent  shall  exercise  the  exclusive  rights  to  sdl 
the  manufacturer's  article;  (f)  duration  of  the  contract;  (g) 
the  rate  of  commission  and  how  it  shall  be  applied ;  (h)  terms 
of  settlement  on  commissions;  (i)  the  amount  of  business 
required  to  avoid  cancellatioii;  (j)  agreement  not  to  handle 
competitive  lines. 

The  foregoing  are  some  of  the  salient  features  that  should 
be  included  in  a  contract  with  a  local  foreign  sales  agent.  In 
order  to  make  it  more  forceful  the  contract  should  be  officially 
executed  and  attested.  The  consul  of  the  country  in  which 
the  manufacturer  as  to  do  business  should  witness  the  prin- 
dpal's  signature.  On  the  other  hand,  the  American  consul 
in  the  foreign  country  should  perform  similar  service  for  the 
agent. 

One  clause  in  the  contract  should  receive  careful  attention. 
This  clause  refers  to  the  assignment  of  territory.  A  manu- 
facturer who  does  not  know  geograf^/  may  sign  away  the 
sales  rights  to  an  entire  continent.   An  agoit  in  Santiago, 

Chile,  may  obtain  the  exclusive  sales  rights  for  Argentina  and 
Brazil  from  a  manufacturer  who  is  not  familiar  with  the  great 
distances  involved  in  those  countries.  Territory  should  al- 
ways be  limited  to  a  certain  line. 

The  commission  given  to  a  sales  agent  depends  on  the  lin^ 
as  a  general  rule.  Commissions  may  be  as  k>w  as  1  per  cent, 
or  as  high  as  25  per  cent.  The  commission  figure  is  deter- 
mined by  the  manufacturer  himself.  Time  of  payment  also 
varies.  There  are  no  set  rules.  The  manufacturer  should  see 
that  the  sales  agent  receives  all  commissions  arising  from 
tiie  sale  of  goods  in  his  territory  in  accordance  with  the  terms 
of  the  contract.  It  is  important,  therefore,  that  the  manu- 
facturer should  know  where  goods  purchased  by  commission 
houses  are  bound  for  in  order  that  he  may  give  proper  credit 
and  protection  to  his  sales  agent  on  tiie  fidd. 

Foreign  Branches  0$ 
Selling  Agencies 

A  foreign  branch  may  be  merely  a  selling  agency  or  it  may 

be  a  merchant  handling  a  large  stock  of  goods.  The  establish- 
ment of  a  foreign  branch  requires  delicate  handling.  Bitter 
opposition  from  old  merchants  is  likely  tQ  be  encountered. 


FOREIGN  SALES  ORGANIZATIONS  113 


and  in  dfder  to  reduce  this  to  a  minimum  it  is  necessary  to 

use  tact  and  diplomacy.  Intelligently  operated,  the  branch 
can  be  made  a  success. 

When  the  selling  agency  begins  to  stock  up  with  goods 
from  the  home  factory  it  offers  a  service  that  its  customers 
are  likely  to  appreciate.  An  immediate  supply  of  goods  re* 
moves  long  delays  encountered  in  ordering  and  awaiting  ship- 
ments from  the  source  of  supply.  Often  an  importer  prefers 
to  buy  an  inferior  article  at  home  rather  than  to  take  the 
tfouble  of  sending  for  it  thousands  of  miles  away.  The  for- 
agn  branch,  by  handling  laige  stocks,  relieves  him  of  this 
trouble. 

It  must  be  remembered,  however,  that  the  foreign  branch 
is  an  expensive  proposition  when  it  is  carrying  stocks.  Over- 
head expenses  may  be  high.  Interest  in  the  investment  must 
be  considered,  and  doing  business  in  a  foreign  country  is 
likely  to  run  up  miscellaneous  costs.  It  must  be  remembered, 
also,  that  foreign  branches  are  subject  to  the  laws  of  the 
country  in  which  they  are  operating.  They  must  take  out 
licenses,  and  be  prepared  to  pay  the  regular  taxes,  which  may 
come  high  in  some  instances. 

Combination  branch  offices  have  been  tried  with  consider- 
able success.  Failures  have  been  due  to  the  unintell^;ent 
selection  of  the  personnel  to  conduct  these  combinations  as 
well  as  to  the  petty  jealousies  and  desires  on  the  part  of  the 
member  manufacturers  to  dictate  the  policy  of  the  combina- 
tion. Quite  often  a  manufacturer  feels  that  he  is  not  getting 
enough  out  of  the  combination  in  proportion  to  his  expenses 
in  the  upkeep,  so  he  decides  to  drop  out.  It  seems  obvious, 
however,  that  in  order  to  obtain  permanent  success  some 
genius  must  evolve  a  working  plan  that  will  satisfy  the  desires 
of  all  those  who  subscribe  to  the  combination.  As  far  as  is 
known  such  j^an  has  not  as  yet  been  developed  so  as  to  meet 
all  these  requiremeotft 


Cbaftb  X 


COMBINATIONS  IN  FOREIGN  TRADE. 

THI  WlBB-POMlWafE  LAW— CwTiaSM  AND  DEFENSE  OF  WeBB- 
POMERENB  LAW— PROVISIONS  09  THE  MEASUIB— HOW  C»MWNA- 
TIONS  ARE  MADE  UNDER  THB  WlBB-POMEBlNB  LAW. 

The  Wcbb-Pomcrene  Law,  approved  April  10, 1918,  permits 
cofttbinatioiis  in  escport  trade.  In  the  words  of  a  critic  the  law 
permits  "our  manufacturers  to  do  to  a  foreign  consumer  who 
has  no  vote  in  our  affairs  what  cannot  be  done  to  the  people  of 
the  United  States,  whose  constitutional  rights  enable  them  ef- 
fectively to  express  tiieir  approval  or  dis|to«ttrc.''  Ontheother 
hand  a  champion  of  the  measure  declares  that  "the  essential 
object  of  this  law  is  to  give  American  exporters  a  fair  chance 
to  compete  with  the  exporters  of  other  countries  by  enabling 
them  to  reduce  expenses  of  marketuig,  thns  permiUing  the 
quotation  of  such  prices  in  foreign  countries  as  will  make 
American  products  attractive  to  the  consumer." 

It  will  be  remembered  that  the  law  caused  considerable  con- 
cern in  fordgn  countries  when  it  was  enacted,  and  fears  were 
expressed  on  aU  sides  that  it  was  probably  an  '"American  de- 
vice to  control  the  world's  markets  at  theur  own  prices." 
While  the  provisions  of  the  law  are  aimed  to  check  unfair 
methods  and  abuse  in  foreign  markets,  it  will  be  necessary, 
however,  to  prove  that  it  is  simply  an  instrument  to  assist 
American  manufacturers  in  develc^mg  foreign  business  along 
legitimate  lines,  and  not  a  tool  to  destroy  l^tunate  competi- 
tion. The  burden  of  proof  rests  with  those  manufacturers 
who  operate  in  foreign  countries  under  the  provisions  of  iSb» 
Webb-Pomerene  Law. 

In  this  connection  it  is  well  to  remember  that  the  great  bulk 
of  mr  American  foreign  trade  has  been  built  by  individual 
effort— by  individual  export  houses  and  manufacturers.  While 
these  merchants  have  often  encountered  problems  and  disad- 
vantages of  one  kind  or  another  in  the  different  markets. 


COMBINATIONS  IN  FOREIGN  TRADE  115 


nevertheless,  by  sheer  force  of  initiative  and  enterprise,  they 
have  been  able  to  overcome  these  obstacles  without  the  neces- 
sity of  combining  along  gigantic  proporticms.  The  statistics 
of  our  foreign  commerce  prove  this  statement. 

The  chief  advantage  of  the  Webb-Pomerene  law,  it  seems,  is 
to  permit  small  manufacturers  who  are  unable  to  competently 
develop  the  foreign  market  to  cmnbine  for  such  purposes  and 
to  be  able  to  sell  at  such  prices  that  will  meet  the  competition 
of  other  foreign  merchants.  If  this  is  the  real  purpose  of  the 
law  then  there  should  be  no  justihcation  in  the  criticisms 
against  it. 

Two  OpposUe  Views 

on  the  Webh'Pomerene  Law 

It  is  interestmg  to  read  two  very  recent  statements  in  con- 
nection with  the  operation  of  the  Webb-Pomerene  law  that 
appeared  in  the  New  York  Journal  of  Commerce.   One  is 

from  an  Australian  business  man  complaining  against  the  law 
and  the  other  is  from  an  American  export  man  defending  its 
provisions. 

The  name  of  the  foreign  critic  of  the  law  is  Mr.  William 
|>wis  of  Sydney,  N.  S.  W.,  and  he  writes  as  follows: 
^The  people  in  this  country  (Australia)  are  not  disposed  to 

view  with  equanimity  the  possible  effect  of  the  operation  of 
the  Webb-Pomerene  Act,  now  operative  in  America. 

''Right  or  wrong,  an  impression  exists  in  this  country  that 
the  purpose  of  this  bill  is  to  legalize,  for  the  exploitation  of 
commercial  fields  outside  of  the  United  States,  practices  and 
methods  which  the  United  States  Government  has  deemed  it 
necessary  to  suppress  within  its  own  borders,  as  being  inimi- 
cal to  the  public  welfare. 

"Competitive  business  enterprise  is  commendable,  and  to 
an  enlightened  country  such  as  Australia,  welcome.  But  when 
that  enterprise,  instead  of  being  competitive,  merges  into  a 
powerful  combination  with  the  express  purpose  of  exploiting 
and  capturing  the  Australian  market,  welcome  quickly  changes 
to  resentment. 

'T  have  before  me  the  letterhead  of  one  of  the  smaller  recent 
American  cmnbinations.  After  naming  the  coalesced  compa* 
Hies,  it  ends  with  the  sentence :  XSombined  capital  twelve  mil- 


116 


EXPORTING  TO  THE  WORLD 


lion  dollars.'  This  has  an  unpleasant  sound,  savoring  of  a 
threat.  It  is  not  agreeable  to  be  asked  to  choose  between  the 
rattling  of  the  Prussian  sabre  and  the  American  cash  box. 

"Australia,  in  common  with  every  member  of  the  BritiBli 
Empire,  mmt  firmly  welded  than  ever  before,  holds  a  powerful 
weapon  in  reserve  which  she  may  be  forced  to  use  without 
scruple  and  which  she  can  so  use  without  the  slightest  breach 
of  international  law. 

"Suppose,  ior  instance,  that  the  American  manufeictnrers 
of  cotton  piece  goods,  <»ie  of  England's  most  important  in- 
dnstries,  taking  advantage  of  the  Webb  measure,  enter  into 
a  powerful  combination,  controlling  hundreds  of  millions  of 
capital.  Basing  their  expectations  of  business  in  this  country 
on  the  fact  that  the  present  British  preferential  tariff  in  Aus- 
tralia is  practically  n^ligible,  they  estabUsh  central  offices  in 
Sydney.  Instructions  to  the  genml  manager  from  the  board 
of  directors  in  New  York  arc  to  the  effect  that  he  is  to  meet 
and  beat  competition  from  whatever  source.  Such  methods, 
carried  to  their  legitimate  conclusion,  would  mean  the  com- 
plete extinction  of  British  trade  in  cotton  piece  goods  so  hr 
as  AttstnOia  is  concerned.   This  will  never  be  aUowed  to 


"In  the  event  of  such  a  happening  the  immediate  and  prac- 
tical reply  will  be  the  possible  duty  of  50  per  cent,  from  any 
and  all  countries  outside  the  British  Empire;  from  all  coun- 
tries constituting  the  British  Empire,  either  free  or  a  tariff 
for  revenue  only.  Under  these  new  conditions  the  Sydney 
office  of  the  American  cotton  piece  goods  combine,  if  it  ever 
opened,  would  close  within  a  month. 

**I  am,  perhaps,  to  some  extent  qualified  to  speak  impar- 
tially, since,  though  English  by  birth  and  parentage,  I  have 
for  many  years  represented  American  manufacturers  in  Aus- 
tralia.** 

IV,  H.  Mahoney 
Answers  Critkiim 

In  answering  Mr.  Lewis's  criticisms  Mr.  W.  H.  Mahoney, 

manager  of  the  Foreign  Trade  Bureau  of  the  Merchants' 
Association  of  New  York,  said: 
"When  the  Webb-Pomerene  bill  first  became  law  some  such 


COMBINATIONS  IN  FOREIGN  TRADE  117 


opposition  was  sounded  at  Buenos  Aires  as  is  now  voiced  in 
Australia  in  the  protest  which  was  published  in  the  New 
York  Journal  of  Commerce  from  Sydney,  but  when  the  ques- 
tion came  to  be  thoroughly  understood  it  died  down. 

''Only  the  other  day  I  had  a  business  man  in  from  Australia 
who  is  interested  in  the  paper  industry.  He  did  not  appear 
to  be  frightened  by  the  Webb  law  and  he  said  he  was  going 
right  ahead  with  his  plans  for  the  sending  of  paper  from  this 
country  to  Australia.  I  am  inclined  to  think  that  there 
may  be  some  merchants  over  there  who  may  be  unduly 
alarmed.  I  can  hardly  believe  that  it  is  the  general  feeling 
of  business  in  Australia,  but  rather  that  of  individual  firms. 

"As  for  the  threat  of  imposing  heavy  preferential  duties  to 
offset  the  supposed  effect  of  the  Webb  law,  why,  that  would 
be  nothing  new.  Preference  duties  have  already  been  de- 
cided upon  and  were  agreed  to  at  a  conference  in  London 
when  the  Colonial  representatives  were  present. 

"Besides,  there  is  another  aspect  to  the  question.  If  under 
the  combinations  effected  of  small  traders  whereby  they  can 
economize  by  sharing  their  advertising,  shipping  and  over- 
head charges— for  that  was  what  is  really  intended— it  puts 
them  in  a  position  to  compete  for  trade  by  supplying  goods 
at  a  lower  rate  than  others,  it  will  be  the  Australian  people 
or  consumers  who  will  get  the  benefit  of  it.  The  intention  of 
the  competition  is  not  to  strangle  trade  elsewhere  but  to 
compete  fairly  for  it. 

'^As  I  understand  it  in  my  talks  with  ei^rters,  it  is  not 
Australia  that  is  going  to  suffer  from  the  Webb  law  or  is 
going  to  be  affected  to  any  large  extent,  as  the  industries 
under  which  there  is  a  combination  where  business  is  done 
with  the  Commonwealth  are  very  few.'^ 

Combinations  Must 

Obey  Webb-Pomerene  Law 

In  his  remarks  on  the  Webb-Pomerene  law  before  the  Sixth 
National  Foreign  Trade  Council  John  Walsh,  former  chief 
counsel  of  tiie  Federal  Trade  Commission  pointed  out  the 

necessity  of  combinations  engaged  in  developing  foreign  trade 
to  follow  the  straight  and  narrow  path,  in  the  following 
sentence : 

''The  ultimate  success  or  failure  rests  very  largely  on  our 


118  EXPORTING  TO  THE  WORLD 


own  business  men.  If  the  law  is  to  serve  as  a  vehicle  for 
commercial  aggrandizement,  to  benefit  the  strong  at  the  ex- 
pense of  the  weak;  or  if  it  is  to  be  used  for  selfish  and  un- 
scrupulous exploitation  of  foreign  markets,  or  for  the  purpose 
of  manipulating  domestic  prices,  then  the  expectations  of  the 
high-minded  and  broad  visioned  men  who  were  its  sponsors 
would  be  shamefully  thwarted  and  foiled. 

"I  believe  that  neither  the  American  public  nor  foreign 
nations  would  allow  their  respective  public  interest  to  be  in 
any  way  detrimentally  affected  by  any  unfair  and  question- 
able commercial  trade  practices  of  an  association  operating 
under  the  Webb  act 

"And  besides,  let  us  not  forget  that  the  Webb  act  has 
teeth  in  it.  Under  its  provisions  the  remedies  in  Section 
Five  of  the  Federal  Trade  Commission  act  against  unfair 
methods  of  competition  are  made  to  extend  to  unfair  methods 
of  competition  used  in  export  trade  against  competitors  en- 
II  gaged  in  export  trade,  even  though  the  acts  constttuting  such 

unfair  methods  are  done  without  the  jurisdiction  of  the  United 
States. 

"Under  the  Webb  act  the  United  States  Government  de- 
clares itself  in  unmistakable  terms  as  insisting  on  fair  and 
honorable  business  methods  in  export  trade." 

The  popularity  of  this  new  method  of  deyeloping  foreign 
business  by  combinations  is  indicated  in  reliable  reports  to 
the  effect  that  over  80  concerns  are  already  engaged  in  oper- 
ating in  foreign  countries  under  the  provisions  of  the  Webb 
act.  The  law  has  been  in  operation  hardly  over  a  year.  Ex- 
port associations  have  been  formed  in  a  variety  of  industries, 
including  silks,  chemicals,  copper,  textiles,  hardware,  lumber 
and  others.  Small  as  well  as  large  associations  have  been 
formed. 

Provisions  of 

ike  Webb'Pomerene  Law 

The  entire  text  of  the  Webb-Pomerene  law  is  herewith 

'  quoted : 

"An  Act  to  promote  export  trade,  and  for  other  purposes. 

"Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America  in  Congress  assembled, 
That  the  words  'export  trade'  wherever  used  in  this  Act  mean 


COMBINATIONS  IN  FOREIGN  TRADE  119 


solely  trade  or  commerce  in  goods,  wares,  or  merchandise 
exported,  or  in  the  course  of  being  exported  from  the  United 
States  or  any  Territory  thereof  to  any  foreign  nation;  but 
the  words  'export  trade'  shall  not  be  deemed  to  include  the 
production,  manufacture,  or  selling  for  consumption  or  re- 
sale, within  the  United  States  or  any  Territory  thereof,  of 
such  goods,  wares,  or  merchandise,  or  any  act  in  the  course 
of  such  production,  manufacture,  or  selling  for  consumption 
or  resale. 

"That  the  words  Hrade  within  the  United  States'  wherever 
used  in  this  Act  mean  trade  or  commerce  among  the  several 

States  or  in  any  Territory  of  the  United  States,  or  in  the  Dis- 
trict of  Columbia,  or  between  any  such  Territory  and  an- 
other, or  between  any  such  Territory  and  Territories  and  any 
Sute  or  States  or  the  District  of  Columbia,  or  between  the 
District  of  Columbia  and  any  State  or  States. 

"That  the  word  "association"  wherever  used  in  this  Act 
means  any  corporation  or  combination,  by  contract  or  other- 
wise, of  two  or  more  persons,  partnerships,  or  corporations. 

"Section  2.  That  nothing  contained  in  the  Act  entitled 
"An  Act  to  protect  trade  and  commerce  against  unlawful  re- 
straints and  monopolies,"  approved  July  2nd,  1890,  shall  be 
construed  as  declaring  to  be  illegal  an  association  entered 
into  for  the  sole  purpose  of  engaging  in  export  trade  and 
actually  engaged  solely  in  such  export  trade,  or  an  agree- 
ment made  or  act  done  in  the  course  of  export  trade  by  such 
association,  provided  such  association,  agreement,  or  act  is 
not  in  restraint  of  trade  within  the  United  States,  and  is  not 
in  restraint  of  the  export  trade  of  any  domestic  competitor 
of  such  association ;  and  provided  further,  that  such  associa- 
tion does  not,  either  in  the  United  States  or  elsewhere,  enter 
into  any  agreement,  understanding,  or  conspiracy,  or  do  any 
act  which  artificially  or  intentionally  enhances  or  depresses 
prices  within  the  United  States  of  commodities  of  the  class 
exported  by  such  association  or  which  substantially  lessens 
competition  within  the  United  States  or  otherwise  restrams 
trade  therein. 

"Section  3.  That  nothing  contained  in  Section  Seven  of  the 
Act  entitled  "An  Act  to  supplement  existing  laws  against 
unlawful  restraints  and  monopolies,  and  for  other  purposes, 
approved  October  15th,  1914^  shall  be  construed  to  forbid  the 


m  EXPORTING  TO  THE  WORLD 


acquisition  or  ownership  by  any  corporation  of  the  whole  or 
any  part  of  the  stock  or  other  capital  of  any  corporation  or- 
ganized solely  for  the  purpose  of  engaging  in  export  trade, 
and  actually  engaged  solely  in  snch  export  trade,  unless  the 
effect  of  such  acquisition  or  ownership  may  be  to  restrain 
trade  or  substantially  lessen  competition  within  the  United 
States. 

"Section  4.  That  the  prohibitioa  against  "unfair  methods  of 
competition''  and  the  remedies  provided  for  enforcing  said 
prohibition  contained  in  the  Act  entitled  **An  Act  to  create 

a  Federal  Trade  Commission,  to  define  its  powers  and  duties, 
and  for  other  purposes,"  approved  September  26,  1914,  shall 
be  construed  as  extending  to  unfair  methods  of  competition 
used  in  export  trade  against  competitors  engaged  in  export 
trade,  even  though  the  Acts  constituting  such  unfair  methods 
are  done  without  the  territorial  jurisdiction  of  the  United 
States. 

"Section  6.  That  every  association  now  engaged  solely  in 
export  trade,  within  60  days  after  the  passage  of  this  Act, 
and  every  association  entered  into  hereafter  which  engages 
solely  in  export  trade,  within  30  days  after  its  creation,  shall 
file  with  the  Federal  Trade  Commission  a  verified  written 
statement  setting  forth  the  location  of  its  offices,  or  places 
of  business,  and  the  names  and  addresses  of  all  its  officers,  and 
of  all  its  stock  holders  or  members,  and  if  a  cor- 
poration, a  copy  of  its  certificate  or  articles  of  in- 
corporation and  by-laws,  and  if  unincorporated,  a  copy 
of  its  articles  or  contract  of  association,  and  on 
the  first  day  of  January  of  each  year  thereafter,  it  shall  make 
a  like  statement  of  the  location  of  its  offices  or  places  of  busi- 
ness and  the  names  and  addresses  of  all  its  officers  and  of 
all  its  stockholders  or  members  and  of  all  amendments  to  and 
changes  in  its  articles  or  certificate  of  incorporation  or  in  its 
articles  or  contract  of  association.  It  shall  also  furnish  to  the 
Commission  such  information  as  the  Commission  may  re- 
quire as  to  its  organization,  business,  conduct,  practices,  man- 
agement and  relation  to  other  associations,  corporations,  part- 
nerships, and  individuals.  Any  association  which  shall  fail 
so  to  do  shall  not  have  the  benefit  of  the  provisions  of  section 
two  and  section  three  of  this  Act,  and  it  shall  also  forfeit  to 
the  United  States  the  sum  of  $100  for  each  and  every  day  of 


COMBINATIONS  IN  FOREIGN  TRADE  121 


the  continuance  of  such  failure,  which  forfeiture  shall  be  pay- 
able into  the  Treasury  of  the  United  States,  and  shall  be  re- 
coverable in  a  civil  suit  in  the  name  of  the  United  States 
brought  in  the  district  where  the  association  has  its  principal 
office,  or  in  any  district  in  which  it  shall  do  business.  It  shall 
be  the  duty  of  the  various  district  attorneys,  under  the  di- 
rection of  the  Attorney-General  of  the  United  States,  to  prose- 
cute for  the  recovery  of  the  forfeiture.  The  costs  and  ex- 
penses of  such  prosecution  shall  be  paid  out  of  the  appropria- 
tion for  the  expenses  of  the  courts  of  the  United  States. 

"Whenever  the  Federal  Trade  Commission  shall  have  rea- 
son to  believe  that  an  association  or  any  agreement  made  or 
act  done  by  such  association  is  in  restraint  of  trade  within 
the  United  States  or  in  restraint  of  the  export  trade  of  any 
domestic  competitor  of  such  association,  or  that  an  associa- 
tion either  in  the  United  States  or  elsewhere  has  entered  into 
any  agreement,  understanding,  or  conspiracy,  or  done  any  act 
which  artificially  enhances  or  depresses  prices  within  the 
United  States  of  commodities  of  the  class  exported  by  such 
association  or  which  substantially  lessens  competition  within 
the  United  States  or  otherwise  lessens  trade  therein,  it  shall 
summon  such  association,  its  officers,  and  agents  to  appear 
before  it,  and  thereafter  conduct  an  investigation  into  the  al- 
leged violations  of  law.  Upon  investigation,  if  it  shall  con- 
clude that  the  law  has  been  violated,  it  may  make  to  such 
association  recommendations  for  the  readjustment  of  its  busi- 
ness, in  order  that  it  may  thereafter  maintain  its  oi^nization 
and  management  and  conduct  its  business  in  accordance  with 
law.  If  such  association  fails  to  comply  with  the  recom- 
mendations of  the  Federal  Trade  Commission,  said  Com- 
mission shall  refer  its  indings  and  recommendations  to  the 
Attorney-General  of  the  United  States  for  such  action  thereon 
as  he  may  deem  proper. 

"For  the  purpose  of  enforcing  these  provisions  the  Federal 
Trade  Commission  shall  have  all  the  powers,  so  far  as  ap- 
plicable, given  it  in  "An  Act  to  create  a  Federal  Trade  Com- 
mission, to  define  its  powers  and  duties,  and  for  other  pur- 
poses.** Approved  April  10,  1918." 

Summarized,  the  advantages  to  be  derived  from  the  Webb- 
Pomerene  law  are  as  follows; 


122 


EXPORTING  TO  THE  WORLD 


(a)  Combination  produces  economies  in  production  and  dis- 
tribution. 

(b)  Standardization  of  products  results  in  greater  econo- 
mies of  production. 

(c)  Standftrdization  would  improve  the  quality  of  merchan- 
dise, and  enhance  the  value  of  American  goods  overseas. 

(d)  Combination  would  eliminate  waste  by  an  intelligent 
distribution  of  orders  to  factories  best  fitted  to  turn  them  out. 

(e)  Combination  would  mean  specialization  and  thus  lower 
costs. 

(f )  Hie  greatest  saving  of  all  would  be  the  elimination  of 
dnpHcation  of  selling  organizations,  warehouses,  branch  of- 
fices, advertising,  etc. 

(g)  Economies  in  shipment  would  be  effected. 

(h)  Combinations  would  be  able  to  develop  foreign  maricett 
with  the  highest  degree  ci  efficiency,  and  the  maximum  results 
at  minimum  costs  to  partidpants. 

(1)  The  financing  of  foreign  sales  and  the  obtaining  of 
credit  information  would  be  facilitated. 

Combinations  as  Necessity  of 
Meeting  Foreign  Competition 

Is  it  necessary  to  combine  in  the  United  States  in  order  to 
meet  foreign  competition  abroad? 

In  view  <^  our  successes  in  the  foreign  field  m  the  past— 
and  this  means  our  successes  with  manufactured  articles  as 
well  as  with  our  raw  materials — it  would  seem  that  declara- 
tions of  the  necessity  of  combining  to  meet  the  cut  prices  of 
our  most  dangerous  competitors  overaeas  are  a  bit  far-fetched. 
Not  long  ago  a  well-known  exporter  who  understands  for- 
eign trade  as  well,  perhaps,  as  anyone  else  in  America,  said 
that  the  results  promised  under  the  provisions  of  the  Webb- 
Pomerene  Act  were  being  exaggerated. 

"I  don't  quite  understand  why  there  ia  so  much  en^uataam 
over  this  measure,**  he  said.  ^It  would  seem  that  American 
manufacturers  have  never  had  a  show  in  foreign  markets  until 
this  law  came  into  effect  to  show  them  the  way  to  the  prom- 
ised land.  Personally,  I  believe  it  will  do  some  good  in  some 
quarters — ^in  places  where  basic  materials  are  involved  in 
sales  abroad*  There  is  no  question  that  there  would  be  an 
economic  saving  In  this  respect  But  where  vre  are  hunting 


COMBINATIONS  IN  FOREIGN  TRADE  123 


for  markets  in  foreign  countries  for  our  typewriters,  our  auto- 
mobiles, our  sewing  machines,  our  stationery,  and  hundreds 
of  other  manufactured  articles,  I  am  afraid  that  the  combina- 
tion will  serve  as  a  hindrance  instead  of  an  advantage.  Why? 
Because  these  manufactured  articles  I  have  just  mentioned 
need  specialized  selling  effort,  and  that  is  practically  impossi- 
ble  under  huge  combinations  such  as  the  Webb-Pomerene  Act 
permits.    It  means  lost  identity  of  an  article." 

Combinations  in 
Foreign  Countries 

The  combination  idea  seems  to  have  had  its  growth  in 
Europe.  Before  the  war  export  combinations  were  quite  com- 
mon in  the  principal  countries  of  Europe,  and  seemed  to  have 
reached  the  highest  point  of  efficiency  in  Germany,  where  the 
"cartel"  system  was  one  of  the  principal  factors  that  made 
German  foreign  trade  what  it  was  up  to  the  few  months  pre- 
ceding the  great  war  that  shattered  her  commerce.  In  this 
country  there  were  600  important  cartels,  embracing  every  im- 
portant industry  in  the  country.  In  some  instances,  however, 
these  cartels  were  not  created  primarily  to  meet  competition 
of  other  foreign  countries  in  overseas  business,  but  to  stifle 
competition  at  home,  and  to  control  the  market  An  instance 
of  this  policy  is  shown  in  the  great  German  dye-color  industry 
o|)erated  as  a  unit  in  foreign  trade  under  an  agreement  by  two 
powerful  concerns  working  under  a  fifty  year  contract  not  to 
compete  against  each  other.  Other  gigantic  combinations  were 
to  be  found  in  the  electrical  equipment  industry,  the  coal  and 
coke  industry,  and  the  iron  and  steel  industry,  the  products  of 
which  were  sold  through  great  centralized  selling  agencies  to 
all  parts  of  the  world. 

Other  Nations  Have  Great 

Combinations  for  Export 

Nor  was  Germany  alone  in  this  policy  of  combining  to 
efficiently  develop  and  sell  products  in  foreign  countries.  We 
find  gigantic  syndicates  in  France,  Belgium,  Italy,  Russia, 
Austria,  Switzerland,  Sweden  and  Greece.  In  South  America 
in  certain  countries  we  find  producers  united  in  joint  selling 
agendes  to  control  the  market,  probably  to  stifle  competition 
and  to  efficiently  sell  goods  in  foreign  countries. 

Japan  has  a  textile  organization  that  is  developing  and  ob- 


m  EXPORTING  TO  THE  WORLD 


taining  the  cotton  goods  trade  of  North  Chiiia.  A  "tea  conndP 
controls  the  tea  trade  of  that  country.    Other  industries  in 

Japan  are  rapidly  falling  in  line  to  combine,  and  they 
have  not;  only  the  approval  of  the  Government  but  its  actual 
support 

England  has  not  committed  itself  to  the  policy  of 

organizing  powerful  combinations  for  foreign  trade  as  strongly 
as  other  nations.  One  reason  is  because  the  United  Kingdom 
has  been  able  to  develop  excellent  markets  for  its  manu&ic- 
tttied  product  in  all  comera  of  the  earth.  Her  most  excellent 
selling  methods,  her  great  chain  of  branch  banks,  combined 
with  the  most  efficient  merchant  marine  in  the  v^rorld,  have 
given  that  country  an  advantage  that  relieved  her  of  the 
necessity  of  creating  "cartels"  to  obtain  new  business. 

In  spite  of  this  tremendous  trade  that  has  been  developed 
by  Great  Britain  in  foreign  countries  we  find  her,  nevertheless, 
engaged  in  combining  to  market  certain  basic  products  for 
overseas  sales.  England's  coal,  for  instance,  is  marketed  in 
South  America  and  other  parts  of  the  world  through  central 
selling  agencies  in  which  produdi^  companies,  selling  com- 
panies, steamship  lines  and  foreign  distributing  companies  co- 
ordinate their  efforts.  This  policy  is  followed  in  the  cement 
trade  as  well.  Smce  the  end  of  the  Great  War,  however. 
Great  Britain  has  taken  rapid  strides  in  the  further  develop- 
ment of  the  combinaticm  or  "cartel**  idea,  and  is  expected  to 
take  a  prominent  part  in  the  regaining  of  her  immense  trade, 
which  she  temporarily  lost  during  the  strife  in  Europe. 

Combinations'  Must 
CompeU  JVM  CombmaHoHs 

The  outgrowth  of  this  combination  idea  all  over  the  world 
will  mean  that  the  United  States  will  be  forced,  whether  she 
likes  it  or  not,  to  meet  the  plans  of  her  competitors  in  the 
most  efficient  and  intelligent  form  that  legal  means  will  justify. 
The  Webb-Pomerene  Act  grants  the  American  manu&cturer 
or  ejqfiorter  adequate  power  to  cope  with  our  trade  rivals.  In 
the  language  of  the  Federal  Trade  Commission :  "If  Ameri- 
cans are  to  enter  the  markets  of  the  world  on  more  nearly 
equal  terms  with  their  organized  competitors  and  their  organ- 
ized customers,  and  if  small  American  producers  and  manu- 


COMBINATIONS  IN  FOREIGN  TRADE 


125 


facturen  are  to  engage  in  export  trade  on  profitable  terms, 
they  must  be  free  to  unite  their  efforts. 

"Without  any  export  organization  foodstuffs  and  raw  mate- 
rials can  readily  be  sold  at  some  price,  but  to  avoid  needless 
expense  in  distribution,  to  meet  formidable  foreign  buying 
agencies,  and  to  insure  profitable  txpott  prices,  co-operation 
among  American  producera  of  such  commodities  is  desirable. 

"In  the  sale  of  factory  products  co-operation  is  even  more 
desirable.  Such  goods  must  be  advertised,  demonstrated,  and 
m  market  created  abroad,  often  in  the  face  of  the  keenest  com- 
petition from  great  combinations  of  foreign  manufocturers. 
Obviously,  only  strong  organizations  can  undertake  this  con- 
test. If  groups  of  American  manufacturers  and  producers, 
either  of  competing  or  non-competing  goods,  can  combine 
their  efforts  they  can  share  the  cost  of  developing  new  mar- 
kets, establish  themselves  firmly,  extend  credit  more  readily 
to  foreign  customers,  and  compete  more  successfully  with  for- 
eign syndicates  and  cartels." 

Haw  German  Cartel 
System  Was  Developed 

It  will  be  necessary  to  briefly  review  the  German  **cartel** 
system  as  an  illustration  of  the  extent  to  which  this  policiy 
grew.  Germany  is  taken  as  an  illustration  merely  because 
combinations  were  more  fully  developed  there  than  in  any 
other  country. 

A  German  writer  says  cartels  are  "associations,  founded  by 
contract  for  certain  periods  of  time,  of  independent  enterprises 
belonging  to  kindred  branches  of  industry  or  of  branches  of 
industry  with  nearly  identical  interests,  the  individual  mem- 
bers  of  the  association  retaining  their  independence  but  join- 
ing for  the  purpose  of  r^^ulating  production  and  sales  accord- 
ing to  common  points  of  view  and  in  the  common  interest.'' 

This  definition  practically  covers  American  combinations 
under  the  Webb-Pomerene  Act. 

A  distinction  between  a  trust  and  a  cartel  must  be  drawn, 
however.  Cartels  are  not  permanent.  Members  can  with- 
draw and  recover  their  complete  mdependence  if  they  choose. 
In  a  trust,  such  as  it  is  known  in  America,  there  is  centralized 
authority  in  a  single  organization,  and  it  is  permanent.  A 


126  EXPORTING  TO  THE  WORLD 


tm%  Is  not  a  combinatkm  of  corporatioii8»  but  a  single  €or^ 
poration  in  itsdi. 
The  growth  of  the  cartel  system  in  Germany  is  reflected  in 

statistics  issued  in  that  country  in  1903,  showing  that  there 
were  385  cartels  at  that  time  doing  business  in  Germany,  which 
were  distributed  among  the  different  industries  as  follows: 

Cartels  Cartels 

Coal   19        Glass    10 

Iron   62        Bricks   132 

Metals  (excluding  Iron)  11         Stones,  earths  27 

Chemicals   46        Clay    4 

Tejqtllet  31       Foodatnfft   17 

Leather,  rubber   6       Electrical    2 

Wood   J.   5       Otben    7 

Paper   6 

These  386  cartels  represented  12,000  plants,  and  the  mining 

•ad  chemical  industries  ranked  first 

They  grew  in  number  rapidly,  and  in  1911  they  were  esti- 
niated  to  have  reached  a  total  of  600  in  Germany. 

How  German  Banks 
Helped  the  Cartels 

The  methods  employed  by  the  great  German  banks  in  aid- 
ing these  cartels  is  told  by  the  Federal  Trade  Commission  as 
follows : 

'The  large  Gennan  banks  have  played  a  potent  part  in  the 
development  of  cartels  and  combinations,  particularly  in  the 

mining,  the  iron  and  steel,  the  electrical,  the  potash,  and  the 
chemical  industries.  The  four  great  Berlin  banks,  viz.,  the 
Deutsche  Bank,  the  Dresdener  Bank,  the  Darmstadter  Bank, 
and  the  Disconto-Gesellschaft,  dominated  the  German  bank- 
ing world.  Until  recently  there  was  a  fifth,  the  A.  Schaaff- 
hausen*scher  Bankverein,  now  absorbed  by  the  Disconto.  The 
A.  Schaaffhausen'scher  Bankverein  was  formerly  particularly 
active  in  organizing  cartels,  and  maintained  a  special  organiza- 
tion, the  "Syndikatskontor  d.  A.  SchaafEhansen'scher  Bank- 
vereins  G.  M.  B.  H.  to  act  as  selling  agency  and  clearing 
house  for  industrial  combines.  With  their  extensive  system 
ot  directors  among  industrials  and  with  their  participation  in 
financing  such  enterprises,  the  great  banks  have  been  able 
strongly  to  mfinence  German  industry,  and  they  have  nsed 
this  influence  to  eliminate  competition  and  to  encourage  con- 
centration. 


COMBINATIONS  IN  FOREIGN  TRADE 


"Thus  the  German  electrical  industry,  a  debtor  industry, 
has  been  dependent  at  all  times  upon  the  co-operation  of  banks 
in  its  development  and  concentration.  The  widely  ramified 
organization  of  investing,  operating,  and  subsidiary  companies 
of  all  kinds  within  the  two  groups  that  dominate  the  German 
electrical  industry  has  been  developed  and  prompted  largely 
by  banks  interested  in  the  various  companies  and  backing 
these  two  great  groups.  In  the  metal  trades  the  Metallgesell- 
schaft,  of  Frankfort  on  the  Main,  in  which  the  Merton  inter- 
ests are  centered,  has  built  up  and  controls  its  world  wide 
business  enterprises  through  a  number  of  financial  institu* 
tions,  banks,  or  holding  companies  in  different  countries. 
These  have  been  organized  for  the  spedal  purpose  of  obtaining 
outside  and  foreign  capital.   For  investment  in  new  mining 
and  similar  enterprises  and  to  maintain  control  over  them 
through  majority  stock  ownership.  The  potash  industry  offers 
another  good  example  of  the  potent  influence  of  banks  and 
fostering  combinations." 

Different  Kinds 
o  f  Gmrmm  CmMi 

German  cartels  may  be  divided  into  the  following  classes  : 

(a)  Agreements  covering  selling  terms,  so-called  "Kondi- 
tionen'*  cartels. 

(b)  Price  cartels. 

(c)  Selling  cartels  or  83mdicates. 

Cartels  in  which  agreements  are  made  as  to  sellir^  terms: 
These  cartels  represent  the  lowest  form  of  cartel  organiza- 
tion. Under  this  form  agreements  as  to  payments,  conditions 
of  sale,  and  handling  of  samples  are  made. 

Price  cartels: 

Cartels  of  this  character  are  origanized  purely  to  influence 
prices  without  centralizing  sales  or  purchases.  Price  cartels 
are  the  most  numerous,  each  having  distinct  methods  of  doing 
business. 

Syndicates  or  selling  cartels: 

These  are  the  most  highly  developed  of  the  German  cartels, 
having  the  most  rigid  and  centralized  organization.  The 
merchandise  of  those  belcmging  to  the  cartel  is  disposed 
through  a  central  selling  agency. 

These  German  cartels  extended  their  activities  into  foreign 


m  EXPORTING  TO  THE  WORLD 


countries,  usbg  aeUing  agencies  thnmgli  wUch  to  place  their 
wares.  Througrh  these  selling  agencies  prices  were  fixed,  com- 
bined advertising  campaigns  were  planned,  and  development 
of  territory  undertaken.  Operating  with  banks,  these  cartels 
were  enabled  to  obtain  invaluable  trade  data  such  as  credit 
information,  business  conditions— «11  of  which  activities  were 
principal  factors  in  the  building  up  of  Germany's  foreign  trade 

before  the  war. 

Instances  are  known  where  manufacturers  producing  non- 
ccmpeting  but  kindred  articles  have  combined  together  for  de- 
veloping of  foreign  markets.  This  policy  was  adopted  in  the 
South  American  and  Chinese  trade  with  great  results.  German 
cartels  representing  the  electrical  industry  were  very  active  in 
I^tin  America  before  the  war.   Entire  power  plants  were 
developed,  equipped,  financed,  and  even  operated  by  German 
cartels.   In  China  the  same  policy  is  said  to  have  been  pur- 
sued with  respect  to  mines.  Competitors  of  foreign  countries 
who  found  themselves  representing  single  lines  found  it  diffi- 
cult to  compete  with  the  Germans,  who  offered  to  undertake 
a  whole  job  for  the  Chinese.  The  rapid  devebpment  of  trade 
in  China  and  South  America  is  due  to  the  efforts  of  German 
industry  under  the  cartel  system. 

Haw  Fordgm  CombmaHmu 
A§€€t  Am€f%cm  Comwmte 

What  effect  foreign  combinations  have  on  our  export  trade 
is  told  by  the  Federal  Trade  CommisMon  in  strengthening  its 
position  that  American  combinations  under  the  Webb-Pom- 
erene  Act  are  necessary  to  combat  competition  overseas : 

*The  greater  part  of  American  export  trade  has  been  with 
European  nations,"  says  the  C4Wimlsmoa  "When  American 
manufacturers  and  producers  are  exporting  to  any  off  these 
countries  they  must  meet  powerful  combinations  of  producers 
and  dealers  iWe.  Some  of  these  combinations  are  interna- 
tional and  own  or  control,  among  others,  American  produdof 
companies.  They  now  have  In  this  country  oil  wells,  coal  and 
metal  mines,  smelters,  refineries,  and  mills.  This  makes  it 
more  difficult  to  compete  with  them  in  the  European  markets. 
In  other  cases  American  manulacturert  and  prodaeeit  must 


CX)MBINATIONS  IN  FOREIGN  TRADE  129 


deal  with  combinations  among  the  European  buyers  of  their 
products.  In  a  few  American  industries,  such  as  petroleum, 
steel*  and  farm  machinery,  powerful  single  organizations  are 
equipped  to  meet  foreign  combinations  on  substantially  equal 
terms.  But  even  in  these  industries,  as  well  as  in  those  where 
no  single  concern  towers  above  its  fellows,  there  are  numerous 
small  and  moderate-sized  producers  who  act  separately  in  con- 
ducting thenr  export  business.  It  thus  results  from  the  con- 
ditions of  the  organization  of  industry  abroad  and  at  home 
that  in  the  great  foreign  commercial  countries  American  com- 
panies  must  often  compete  separately  against  combinations 
of  foreign  producers  and  must  often  sdl  separately  to  combi- 
nations of  foreign  buyers. 

"This  condition  is  repeated  when  American  and  foreign 
manufacturers  compete  in  the  markets  of  countries  alien  to 
both,  as  when  AmtncMn  manufacturers  compete  with  German 
or  English  in  South  America.  Here,  again,  individual  Ameri- 
can exporters  must  encounter  the  united  opposition  of  foreign 
manufacturers  in  many  important  lines  of  trade.  In  fact,  spe- 
cial cartels  and  syndicates  are  often  formed  in  European  coun- 
tries expressly  for  export  trade.  The  combinations  can  afford 
long  and  costly  campaigns  to  gain  foreign  markets,  and  they 
can  gain  favorable  terms  to  purchasers.  Moreover,  the  chief 
foreign  trading  nations  not  only  have  a  distinct  advantage  over 
the  United  States  in  ocean  shipping  under  their  own  flags,  better 
foreign-trade  banking  and  credit  organizations,  and  greater  in- 
vestments in  less  devek>ped  parts  of  the  world,  but  also  it  is  their 
policy  to  unite  these  various  interests  with  their  industrial  com- 
binations into  mose  effective  organizations  for  the  v^^otons 
promotion  of  export  business. 

"These  are  the  salient  facts  concerning  the  character  and 
prevalence  of  cooperation  and  combination  among  foreign 
manufacturers,  producers,  and  dealers.  Foreign  concerns  co- 
operate in  both  home  and  export  trade  to  a  greater  extent 
than  American  concerns  do.  The  advantage  and  necessity  of 
preventing  such  combinations  in  the  American  domestic  trade 
IS  fully  recognized  by  the  Commission,  but  the  export  trade 
presents,  in  its  opinion,  a  different  problem. 

**lt  is  apparent  from  this  statement  of  the  chantcter  of  the 


130 


EXPORTING  TO  THE  WORLD 


bnsiness  orgmiiizatioii  which  Americans  must  compete  against 
in  foreign  markets  that  this  conntr/s  organization  for  export 

trade  must  be  strengthened  if  its  manufacturers  and  prodnccrs 
are  to  compete  on  more  nearly  equal  terms  in  the  commerce 
<^  the  world.  Obviously,  most  of  the  individual  American 
exporters,  handicapped  by  dependence  upon  foreign  shipping 
and  foreign  financial  institutions,  and  forced  single-handed  to 
oppose  united  foreign  competitors,  are  at  a  material  disadvan- 
tage. In  international  trade  the  competitive  conditions  ha\  c 
been  largely  in  favor  of  the  foreign  concerns,  particularly 
when  opposed  by  the  smaller  American  exporters.  Co-opera- 
tion solely  for  export  business  will  go  far  to  permit  the  devel- 
c^ent  stronger  American  organizations,  and  may  be  par- 
tscnlarly  advantageous  to  smaller  concerns.  The  need  of  such 
concerted  action  is  clearer  when  the  character  of  the  export 
trade  of  the  United  States  is  understood.  Under  normal  con- 
ditions about  two-thirds  of  its  exports  have  been  foodstuffs 
and  materials  for  use  in  manufactnrii^^—such  commodities  as 
grain,  flour,  meats,  cotton,  copper,  oil,  coal,  etc ;  and  one-third 
of  its  exports  have  been  manufactured  articles  ready  for  use, 
such  as  machinery  of  all  kinds,  electrical  goods,  automobiles, 
boots  and  shoes,  wearing  apparel,  cloths,  medicines,  drugs, 
points,  varnishes,  etc. 

••The  marketing  of  these  two  broad  classes  of  products  in 
foreign  trade  present  very  different  problems.  Many  food- 
stuffs and  materials  for  manufacture,  such  as  grain,  copper, 
cotton,  etc.,  will  sell  themselves  at  some  price,  usually  at  a 
price  broadly  established  in  competitive  world  markets.  De- 
veloping export  business  in  these  commodities  is  compara- 
tively simple.  There  is  often  no  need  of  creating  a  demand. 
With  this  class  of  business  the  problem  is  greatly  one  of  ob- 
taining a  more  efficient  system  of  selling,  and  partly  one  of 
protecting  our  producers  against  combinations  of  foreign 
buyers.  At  present,  one  of  the  most  practicable  means  for 
obtaining  tbese  results  is  co-operation  among  American  pro- 
^hicers. 

*'In  the  case  of  finished  manufactured  articles,  the  problem 

is  generally  more  difficult.  In  the  factory  products,  both 
staple  and  special,  the  manufacturer  must  often  create  the 
demand  for  his  particular  goods.  While  it  is  not  to  be  for- 


COMBINATIONS  IN  FOREIGN  TRADE  131 


gotten  that  cheapness  and  quality  of  product  are  necessary, 
organization  for  selling  is  also  essentiaL 

'To  the  producer  of  specialties,  however,  co-operation  in 
export  trade  does  not  offer  such  great  advantages  as  to  the 
producer  of  staples.  Absence  of  standardization  is  in  the  way 
of  its  effective  working  and  the  field  of  foreign  markets  is  far 
more  open  and  free  to  specialties  than  to  staples.  In  some 
lines  American  concerns  making  specialties  have  established 
their  products  in  a  world-wide  way  and  are  ahead  of  competi- 
tors from  other  countries.  While,  therefore,  producers  of  spe- 
cialties have  to  create  their  own  market,  many  of  them  feel 
that  they  can  do  this  to  better  advantage  individually.  Some 
of  those  whp  have  not  yet  established  themselves  in  all  their 
markets,  or  who  are  but  beginning  their  campaigns,  favor  co- 
operation, but  what  they  wish  is  co-operation  with  manufac- 
turers of  allied  lines  rather  than  with  competitors. 

''To  the  producer  of  staples,  the  foreign  manufacturer  or 
combination  making  the  same  line  offers  the  most  determined 
competition.  To  establish  the  American  goods  requires  strong, 
practical  selling  campaigns.  Not  only  must  the  customer  be  per- 
suaded to  prefer  the  American  manufactured  article  but  sales 
must  often  be  supplemented  by  the  establishment  of  local 
warehouses  that  will  insure  a  prompt  supply  and  the  customer 
must  be  given  ample  assurance  that  he  can  continue  to  get  the 
same  goods  year  after  year.  Moreover,  this  demand  must  be 
created  in  distant  countries.  In  face  of  determined  and  skill- 
ful opposition  from  competing  foreign  manufacturers  united 
in  powerful  combinations,  this  is  a  most  difficult  undertaking. 
It  is  among  American  manufacturers  of  staples,  therefore, 
particularly  the  smaller  concerns,  that  co-operation  for  esqport 
business  is  especially  needed.  It  will  permit  them  to  create 
organizations  which  can  compete  on  more  equal  terms  with 
the  oiganizations  of  their  foreign  rivals.  They  can  afford, 
then,  to  advertise,  to  study  foreign  demands  and  customs,  to 
make  demonstrations,  to  open  branches,  warehouses,  and 
stores  abroad,  to  collect  credit  information,  and  to  extend 
credit,  to  empl<^  skilled  salesmen  familiar  with  foreign  mar- 
kets, and  to  maintain  a  direct  representation  of  their  own 
which  will  be  firmly  established  and  effective  in  the  markets 


m  EXPORTING  TO  THE  WORLD 


to  be  covered.   The  expense  of  such  promotion  will  not  be 
excessive  when  shared  by  a  number  of  participants. 

^In  many  lines  of  mannlacture  the  export  commission 
houses  and  the  export  merchants  are  undoubtedly  the  best 
agencies  by  which  goods  can  be  placed  in  foreign  markets. 
These  ^ms  have  played  a  great  part  in  the  development  of 
American  trade  in  manufactured  goods,  and  their  function  and 
their  value  in  this  respect  should  not  be  forgotten  or  under- 
rated. But  to  many  of  the  demands  of  international  trade  in 
such  goods  they  are  inadequate.  Frequently  such  articles  re- 
quire highly  ^ecialized  technical  training  on  the  part  of  sales- 
men. In  other  cases  long  and  expensive  introductory  work 
must  be  done  to  create  a  market.  Export  commission  firms 
and  export  merchants  are  far  less  disposed  to  spend  money 
and  energy  in  such  work  than  are  the  manufacturers  whose 
continued  prosperity  depends  upon  the  creation  of  markets  for 
their  goods.  The  commission  house  and  the  export  merchant 
handle  dozens  of  different  lines  of  manufactures.  Their  profits 
come  from  the  total  business,  and  it  is  the  total  with  which 
they  are  chiefly  concerned.  But  the  manufacturer  is  inter- 
ested in  a  single  line  of  products.  He  concentrates  his  effort 
on  the  creation  of  business  for  that  line,  and  he  is  much  more 
resolute  in  the  matter  than  any  intermediary  who  has  no 
capital  invested  in  manufacturing  plants  and  equipment. 

"In  domestic  business,  competition,  independence,  and  the 
pJay  of  individual  forces  is  the  settled  policy  of  this  country. 
The  law  requires  that  this  shall  be  the  condition  of  business 
here.  Abroad  the  legal  ccmditkms  are  different  In  many 
countries  combination  is  permitted  and  in  some  it  ia  even 
encouraged.  What  is  equality  of  opportunity  for  manufac- 
turers within  this  country,  therefore,  becomes  inequality  and 
disadvantage  for  them  when  they  undertake  to  export  to  other 
cooatries.** 

H€w  Combimaumi  Are 

Made  Under  Webb  Law 

The  chief  problem  in  combining  under  the  Webb  act  seems 
to  be  that  of  obtaining  the  centralisation  with  the  least  km 
of  individuality  and  independence  on  ^  part  of  tiioae  con- 
cerns entering  the  association.  This  apparently  is  a  problem 


COMBINATIONS  IN  FOREIGN  TRADE  133 


which  must  be  left  to  the  solution  of  individual  industries  and 
groups. 

Mr.  Gilbert  H.  Montague,  of  the  New  York  Bar,  who  was 
counsel  to  the  special  committee  of  the  American  Manufac- 
turers Export  Association  in  support  of  the  Webb  law,  in 
analyzing  the  measure  in  a  brochure  for  the  Guaranty  Trust 
Company  of  New  York  City,  gives  the  foUowing  exa^le  of 
how  various  concerns  met  these  problems: 

"Such  export  trade  as  there  was,  in  a  certain  American  in- 
dttstiy/'  says  Mr*  Montague,  ''had  been  confined  to  several 
large  concerns  represented  abroad  tor  branch  houses  or  ei^ort 
houses.  ' 

"Upon  the  return  of  normal  conditions,  it  seemed  certam 
that  general  oYer-pfoductk>n  would  exist  through  the  industry 
at  home,  while  abroad  an  active  and  constant  demand  would, 
in  all  probability,  be  resumed  in  various  markets  at  prices, 
and  for  grades  on  which  many  concerns  in  the  industry  would 
then  be  glad  to  quote.  The  handful  of  concerns  already  sell- 
ing  abroad  were  as  yet  unwilling  to  alter  their  existing  re- 
lations  with  branch  houses  and  export  houses.  They  would, 
however,  make  with  any  joint  selling  organization  compris- 
ing the  rest  of  the  industry,  satisfactory  arrangements  regard- 
ing prices  to  foreign  buyers,  or  terms  of  export  sales,  or 
credits  to  foreign  customers,  or  grades  of  export  products, 
or  other  subjects  of  common  interest.   A  man  experienced  in 
the  industry,  and  acquainted  with  conditions  in  foreign  mar- 
kets, could  be  engaged  for  a  reasonable  salary  and  a  fair 
bonus  arrangement  as  general  manager  of  a  joint  selling  or- 
ganization. With  him,  and  with  one  or  two  banks  familiar 
with  conditions  in  foreign  markets,  plans  had  been  worked 
out  for  financing  the  sales  abroad,  and  for  financing  the  pur- 
chases at  home,  and  for  a  schedule  of  credits  for  sales  abroad 
and  for  porchases  at  home,  and  for  opening  sales  branches  be- 
ginning sales  promotion  in  several  selected  foreign  markets. 
From  this,  and  from  an  estimate  of  prospective  operating  ex- 
penses, a  budget  had  been  worked  out  of  the  probable  finan- 
cial requirements  of  the  joint  selling  organization.  With  the 
Ka«il<4«g  aocommodatkm  that  seemed  reasonably  assured,  and 
with  an  ample  margin  of  safey,  an  initial  investment  of  pMr 

000  seemed  sufficient  to  start  the  organization* 


134  EXPORTING  TO  THE  WORLD 


How  Corparaium 
IVoi  Orgmmed 

"A  corporation  was  finally  determined  upon  to  be  organized 
under  the  laws  of  one  of  the  eastern  states,  with  the  purposes 
carefuUy  limited  to  those  permitted  by  the  Webb-Pomerene 
Law,  and  with  capital  stock  consisting  of  5,000  preferred 
shares  and  5,000  common  shares,  the  preferred  shares  to  be 
eight  per  cent  per  annum,  cumulatiYe,  par  value  $100  each,  to 
be  all  issued  at  organization,  on  which  $40  per  share  was  to 
be  paid  up  and  $60  per  share  was  to  be  subject  to  call,  the 
common  shares  to  be  without  nominal  or  par  value,  to  be  is- 
sued only  as  bonus,  share  for  share,  with  subscriptions  for 
preferred  shares,  and  only  to  concerns  actually  participating 
in  the  joint  selling  arrangement  No  participating  concern 
was  to  have  more  than  one  vote,  and  each  was  to  be  repre- 
sented upon  the  Board  of  Directors,  whose  powers,  when  not 
in  session,  were  to  be  vested  in  a  small  executive  Committee. 

"Each  participating  concern  was  to  execute  an  agreement 
with  the  corporation,  amstituting  the  latter  exclusive  agent 
of  the  former,  lor  the  sale  of  the  former^s  entire  export  product 
dnrii^  the  life  of  the  agreement.  This  export  product  was  to 
amount  to  a  specified  percentage  of  the  participating  concern's 
output,  consisting  of  specified  grades  and  quantities.  The 
corporation  was  to  fix  the  prices  at  which  it  should  sell  the 
export  product,  and  bill  and  collect  therefor  in  its  own  name. 
The  partidpatmg  concern  was  to  standardize,  label,  mark, 
pack,  and  ship  its  export  product  as  directed  by  the  corpo- 
ration, and  was  to  protect  the  latter  in  respect  of  all  claims 
by  purchasers.  The  participating  concern  was  to  bear  all 
freight  and  other  charges  to  the  seaboard,  but  the  corpora- 
tion  was  to  bear  all  freight  and  other  charges  beyond  the  sea- 
board, and  an  selling  expenses  of  the  corporation.  For  expon 
products  which  the -participating  concern  furnished  the  cor- 
poration, the  participating  concern  was  to  be  credited  upon 
the  basis  of  prices  arrived  at  by  one  of  a  variety  of  ways. 
Thus,  the  corporation  might  take  from  each  participating  coo. 
cem  ui  opti<m  for  a  specified  period,  upon  specified  grades  and 
quantities  upon  specified  prices.  Again,  whenever  the  cor- 
poration desired  to  quote  upon  a  prospective  order,  it  might 
communicate  with  each  participating  concern,  and  fiU  the 


COMBINATIONS  IN  FOREIGN  TRADE  135 


order  from  which  every  participating  concern  named  the  loirest 
price.  As  compensation  for  its  services,  the  corporation  was 

to  receive  and  retain  the  excess  of  the  export  price  at  which 
it  should  sell  such  product  over  and  above  the  price  at  which 
it  purdiased  from  the  participating  concern.  The  corpora- 
tion was  to  settle  with  the  participating  concern  for  each 
shipment  within  thirty  days,  less  two  per  cent  discount  in  ten 
days.  Out  of  the  aggregate  profits  realized  on  the  operations 
of  the  corporation,  the  corporation  was  to  retain  an  amount 
{»ufticient  to  pay  cumulative  dividends  at  the  rate  of  eight  per 
centum  per  annum  on  its  preferred  shares,  and  also  such 
amount  as  the  Board  of  Directors  should  deeih  proper  lor 
reserves.  Out  of  any  balance  remaining  the  corporation  was 
to  grant  to  each  participating  concern  then  in  good  standing 
a  rebate  in  the  proportion  which  the  amount  of  export  product 
guaranteed  by  each  participating  concern  bore  to  the  ag- 
gr^te  of  similar  txpott  products  guaranteed  by  all  par- 
ticipating concerns. 

Another  Example 
of  Co-operation 

"Most  of  the  concerns  in  another  American  industry  had 
had  some  experience  in  export  trade  and  had  suffered  greatly 
from  one  another's  competition  in  foreign  markets. 

**Upon  the  return  of  normal  conditions  it  seemed  certain  that 
export  trade  would  be  resumed  with  a  recurrence  of  the  former 
unsatisfactory  conditions,  in  which  foreign  buyers,  as  formerly, 
would  combine  to  present  a  united  front  against  each  Ameri- 
can exporter,  and  by  playing  one  against  another  would  force 
each  to  underbid  the  other  until  as  so  often  had  occurred  in 
the  past,  the  combined  foreign  buyers  would  obtain  the  prod- 
uct below  a  fair  and  reasonable  price.  Most  of  the  concerns 
in  the  industry  liad  suffered  so  much  in  the  past  from  these 
conditions,  and  were  so  fully  convinced  of .^he  wastes  involved 
in  their  competition  with  one  another  in  foreign  markets,  that 
they  were  ready  to  co-operate  in  any  reasonable  form  of  single 
joint  selling  organization.  A  man  who  had  made  his  mark  as 
foreign  sales  manager  for  one  of  the  concerns,  and  whose  in- 
tegrity and  impartiality  were  approved  by  all,  could  be  en- 
gaged as  general  manager.  Desirable  locations  in  a  number 
of  foreign  markets  ooold  be  secnred  simply  by  taking  over 


136  EXPORTING  TO  THE  WORLD 


Imndiet  ikeady  maintained  there  one  or  another  of  the 
participating  concerns.  There  was  abundant  fiast  experience 

from  which  to  plan  the  office  management  and  sales  organiza- 
tion, to  work  out  the  details  of  selling,  credits,  financing,  ship- 
ping, and  traffic,  and  to  draw  np  a  budget  of  prob|i>le  financial 
requirements  lor  a  joint  selling  ofganisatioiL 

How  This  Combination 
Was  Incorporated 

"A  corporation  of  $150,000  capitalization,  entirely  of  paid-op 
common  stock,  was  finally  determined  npon,  to  be  organized 

under  the  laws  of  one  of  the  western  states,  with  its  purposes 
carefully  limited  to  those  permitted  by  the  Webb-Pomerene 
law.  Only  concerns  which  should  agree  to  sell  their  entire 
export  output  through  the  corporation  were  eligible  to  become 
stockholders ;  and  no  concern  was  to  be  entitled  to  more  than 
one  vote,  regardless  of  the  number  of  shares  it  might  own; 
and  no  concern  ot  group  of  concerns  was  ever  to  maintain  a 
majority  interest  or  dominating  control  of  the  corporation. 
To  carry  out  these  provisions,  every  share  of  stock,  excepting 
the  qualifying  shares,  was  to  be  endorsed  in  blank  by  the 
stockholders  and  deposited  in  trust  with  stock  trustees.  Upon 
this  stock  the  corporation  was  to  have  a  first  lien  as  security 
lor  the  faithful  observance  and  performance  by  the  stodc- 
holders  of  the  corporate  by-laws  and  resolutions  and  of  any 
agreements  entered  into  or  obligations  incurred  by  the  stock- 
holder with  respect  to  the  corporation.  In  event  of  the  stock- 
iK^der's  default  in  this  regard,  the  Board  of  Directors  could 
tender  to  the  stockholder  the  boc^  value,  not  exceeding  the 
par  vahte,  of  his  stock,  less  any  indebtedness  owing  by  the 
stockholder  to  the  corporation,  and  could  then  cancel  his  stock, 
and  reissue  it  to  the  stock  trustees,  who  in  turn  might  sell  it 
to  concerns  eligible  to  become  stockholders.  According  to  the 
by-laws,  specified  geographical  groups  of  stockholders  were 
always  to  be  entitled  to  specified  numbers  of  directors  in  the 
Board  of  Directors  and  in  the  Executive  G>mmittee.  Divi- 
dends were  to  be  limited  to  seven  per  centum  per  annum,  and 
surplus  earnings  were  to  be  retained  for  reserves,  or  expended 
in  sales  promotion  in  export  trade,  according  as  the  Board  of 
Directors  miffht  determine. 


COMBINATIONS  IN  FOREIGN  TRADE  137 


Agre€mntis  WUh 
PartidpaHng  Concerm 

•*Each  participating  concern  was  to  execute  an  agreement 
with  the  corporation,  constituting  the  latter  the  exclusive 
agent  of  the  former,  for  the  sale  of  the  former's  export  product 
during  the  life  of  the  agreement.  This  export  product  was  to 
consist  of  specified  quota  determined  from  time  to  time  by 
the  Board  of  Directors  of  the  corporation.   The  corporation 
was  to  sell  the  export  product  at  such  prices  as  the  corporation 
should  be  able  to  obtain,  and  was  to  allot  its  orders  fairly  and 
impartially  among  the  participating  concerns,  as  nearly  as 
possible  in  accordance  with  quotas  determined  from  time  to 
time  by  the  Board  of  Directors  of  the  corporation.  Each  par- 
ticipating concern  was  to  accept  and  execute  such  orders  as 
the  corporation  should  assign  to  it.    The  corporation  was  to 
guarantee  all  accounts  that  it  should  sell,  and  was  to  settle 
with  each  participating  concern  for  each  shipment  within 
thirty  days,  and  was  to  retain  for  its  services  a  commission  of 
two  and  one-half  per  centum.   The  agreement  between  the 
corporation  and  the  participating  concern  was  to  provide  for 
no  rebate  upon  this  condition,  and  the  only  refund  at  any  time 
to  which  the  participating  concern  was  to  be  entitled  was  in 
the  form  of  dividends  upon  such  stock  as  the  participating 
concern  might  own  in  the  ccHrporatioii. 

Another  Typical  Case  , 
of  a  Combination 

"Most  of  the  concerns,  in  another  American  industry,  had 
lor  years  been  selling  a  substantial  part  of  their  output  in 
export  trade,  and  had  suffered  greatly,  in  the  manner  above 

described,  from  combinations  of  foreign  buyers. 

"Much  as  the  industry  had  suffered  from  this  cause,  how- 
ever, certain  concerns,  whose  co-operation  was  deemed  to  be 
essential,  were  known  to  be  adverse  to  becoming  full  members 
of  any  single  joint  selling  organization.  Every  concern,  on  the 
other  hand,  had  for  years  been  accustomed  to  sell  its  es^rt 
product  through  one  or  another  agent,  whom  it  had  paid,  on 
a  commission  basis,  for  selling,  financing,  and  effecting  deliv- 
eries abroad. 

''A  well  qualified  general  manager,  and  suitable  foreign  rep- 


138  EXPORTING  TO  THE  WORLD 


resentattves,  were  readily  available  for  a  joint  selling  organiza- 
tion. The  financial  requirements  of  such  an  organization,  also, 
were  ascertainable  with  reasonable  accuracy,  and  were  easily 
within  the  abihty  of  the  industry  to  provide.  A  corporation 
was  accordingly  determined  upon,  to  be  organized  under  the 
laws  of  one  of  the  eastern  states  with  its  purposes  carefully 
limited  to  those  permitted  by  the  Webb-Pomerene  law,  and 
with  a  cash  capital  of  $100,000  to  be  obtained  by  the  issue  of 
partly  paid  common  stock,  the  balance  to  be  subject  to  call  in 
event  of  any  unexpected  increase  in  the  financial  requirements 
of  the  corporation.  Only  concerns  that  should  agree  to  sell 
their  entire  export  product  through  the  corporaticm  over  a 
specified  number  of  years  were  to  be  eligible  to  become  stock- 
holders. 

Methods  of  Sales 
DistribuHoH 

"Each  participating  concern  was  to  execute  an  i^freement 
with  the  corporation,  constituting  the  latter  the  exclusive 
agent  of  the  former  for  tlie  sale  of  the  former's  entire  export 
product  during  the  life  of  the  agreement.  This  export  product 
was  to  amount  to  a  specified  proportion  of  the  participating 
concern's  output  The  corpofatioa  was  to  sell  the  export 
product  at  the  best  prices  that  it  could  obtain,  and  was  to  allot 
orders  among  the  participating  concerns  as  nearly  as  possible 
in  proportion  to  the  amount  of  export  product  which  each  had 
guaranteed  to  the  corporation.  The  participating  concern  was 
to  standardize,  label,  mark,  pack,  and  ship  its  export  product 
as  directed  by  the  corporation,  and  was  to  protect  the  latter  in 
respect  of  aU  claims  by  purchasers.  The  participating  concern 
was  to  bear  aU  freight  and  other  charges  to  the  seaboard,  but 
the  corporation  was  to  bear  all  freight  and  other  charges  be- 
yond the  seaboard,  and  all  expenses  of  the  corporation.  For 
such  products  as  the  participating  concern  furnished  the  cor- 
poration, the  participating  concern  was  to  be  credited  Uj^n 
the  basis  of  prices  specified  in  a  schedule  attached  to  the  agree- 
ment As  compensation  for  its  services,  the  corporation  was 
to  receive  a  commission  of  three  and  one-half  per  centum,  and 
to  retain  the  excess  of  the  export  price  at  which  it  should  sell 
such  product  over  and  above  the  price  at  which  it  purchased 
from  the  participating  concern.  The  oorporatioii  was  to  settle 


COMBINATIONS  IN  FOREIGN  TRADE  139 


with  the  participating  concern  for  each  shipment  within  ten 
days  after  delivery  of  shipment  at  the  seaboard,  less  two  per 
cent  discount  for  cash  against  bills  of  lading  to  the  seaboard. 
Out  of  the  aggregate  commissions  received  by  the  corporation 
the  corporation  was  to  retain  an  amount  sufficient  to  pay  divi- 
dends at  the  rate  <^  seven  per  centum  per  annum  on  its  capital 
stock,  and  also  such  amount  as  the  Board  of  Directors  should 
deem  proper  for  reserves.  Out  of  any  balance  remaining,  the 
corporation  was  to  grant  to  each  participating  concern,  then 
in  good  standing,  a  rebate  in  the  proportion  which  ^he  amount 
of  export  product  guaranteed  by  each  participating  concern 
bore  to  the  aggregate  of  similar  export  products  guaranteed 
by  all  the  participating  coBcems. 

"Traveling  in 
Double  Hamessf 

'This  agreement  was  to  be  the  basis  upon  which  the  corpo- 
ration would  sell  the  export  product  of  concerns  participating 

as  stockholders  in  the  joint  selling  organization.  But  some 
concerns,  as  already  has  been  stated,  were  known  to  be  ad- 
verse to  becoming  full  members  of  any  single  joint  selling 
organization.  Each  of  these  coroems,  however,  had  for  years 
been  accustomed  to  sell  its  export  product  through  one  or  an- 
other agent,  whom  it  had  paid  on  a  commission  basis,  for  sell- 
ing, financings  and  effecting  deliveries  abroad.  Each  of  these 
concerns,  accordingly,  was  to  be  invited  to  make  an  agency 
agreement  with  the  corporation,  similar  in  all  substantial  re- 
spects to  the  agency  agreements  which  it  had  been  accus- 
tomed to  make  with  its  former  agents.  These  agreements  were 
to  contain  proviskms  for  their  temunation,  by  either  party, 
upon  fairly  short  notice,  so  that  each  party  would  have  a 
prompt  way  of  escape  if  these  agreements  should  prove  un- 
satisfactory. During  the  life  of  these  agreements,  however, 
the  ccmcems  entering  into  them  could  try  out  the  experiment 
of  traveling  in  double  harness  with  the  rest  of  the  industry-, 
and  if  they  found  the  experiment  satisfactory,  they  could  then 
all  combine,  upon  a  more  enduring  basis,  as  stockholders  and 
full  participating  members,  in  a  joint  sdling  organization. 


140 


EXPORTING  TO  THE  WORLD 


The  Joint  Typg  of 
OrgmmaHon 

"In  the  examples  of  joint  selling  organizations  above  de- 
scribed it  was  the  organization  itself  that  undertook  the  work 
of  seUing  abroad.  This,  however,  is  not  an  essential  charac- 
teristic of  the  joint  selling  type  of  organization.  A  joint  sell- 
ing organization,  having  contracted  with  its  members  for  their 
entire  esqiort  product,  may  find  it  the  part  of  wisdom  to  con- 
tract then  with  an  export  honse  for  tiie  disposal  of  its  export 
product,  on  commission  or  on  some  other  satisfactory  basis. 
The  export  house,  as  shown  above,  may  undertake  for  the  joint 
selling  organization  the  actual  work  of  selling,  financing,  and 
effecting  deliveries  of  the  export  product  controlled  by  the 
joint  selling  organization.  For  the  export  house,  this  arrange- 
ment might  be  attractive  because  it  would  result  in  the  con- 
solidation of  a  number  of  separate,  small,  indifferent  accounts 
into  a  single,  substantial,  desirable  account  For  the  partici^ 
pating  concerns  combining  in  the  joint  selling  organization, 
the  arrangement  might  be  attractive,  because  it  would  promise 
ptQ&t  with  the  minimum  of  risk  and  overhead  JMHH|e,  and 
would  assure  better  terms,  from  the  export  house,  ^^an  each 
of  the  participating  concerns  could  possibly  expect.  Ag^in,  a 
joint  selling  organization,  desiring  itself  to  undertake  the  work 

sdling  abroad,  but  not  on  so  ambitious  a  scale  as  in  the 
examples  above  described,  might  decide  to  seU  througfi  local 
dealers,  or  through  a  traveler,  in  the  mode  characteristic  of 
those  types  of  selling  organization.  Thus  it  might  save  all 
the  wastes  of  competition,  and  all  the  economies  of  combina- 
tion, which  savings  and  econimics  the  joint  typt  of  organiza- 
tk>n  makes  possible,  and  at  the  same  time  might  obtain  all  the 
advantages  which  other  types  of  selling  organization  afford  in 
many  foreign  markets. 

"A  joint  selling  organization,  having  contracted  for  the  en- 
tire export  product  of  its  participating  concerns,  is  therefore 
unfettered  in  its  choice  of  methods  for  selling  in  export  trade, 
and  is  in  position  to  market  abroad  through  branch  houses,  or 
acport  touses,  or  local  dealers,  or  travelers^  througb  any  type 
of  selling  organization  whatsoever." 


COMBINATIONS  IN  FOREIGN  TRADE  141 


Individual  Methoas 
Govern  OrgamUation 

"Nor  should  it  be  forgotten  that  joint  selling  organizations 
like  other  types  of  Export  Associations,  may  combiiM  with  erne 

another  into  larger  and  more  comprehensive  joint  selling 
organizations,  whenever  greater  economies,  or  more  efficiency, 
or  any  other  advantages,  to  themselves  and  to  the  concerns 
participating  in  them,  appear  to  lie  in  that  direction,"  says 
Mr.  Montague. 

"And  should  conOMuations  of  this  character  appesu*  desurable, 

but  obstacles  be  presented  in  the  loss  of  individuality  and  in- 
dependence which  a  larger  joint  selling  organization  might 
involve*  it  should  not  be  forgotten  that  single  joint  selling 
organizations,  instead  of  combining  into  a  larger  selling 
organization,  may  simply  enter  into  agreements  with  one 
another  regarding  allotment  of  eaeport  orders,  or  prices  to 
foreign  buyers,  or  terms  of  export  sales,  or  credits  to  foreign 
customers,  or  grades  of  export  products,  or  allocation  of  for- 
eign markets,  or  pooling  of  foreign  business,  or  apportion- 
ment of  output  for  export  or  division  of  sales  territory  abroad, 
or  common  selling  agencies  for  export,  or  joint  representation 
in  export  trade,  or  the  like. 

"Nor,  finally,  should  it  be  forgotten,  that  the  humblest 
American  exporter,  whether  he  sells  through  an  export  house, 
or  local  dealers,  or  a  traveler,  or  only  by  mail  order,  may 
nevertheless,  deal  at  arm's  length  with  the  largest  jmnt  sellu^ 
organization,  or  may  come  to  terms  with  it,  if  the  terms  are 
satisfactory  to  both  parties,  upon  any  agreement  of  the  char- 
acter above  described,  or,  if  he  prefer,  may  go  his  own  gait 
in  export  trade,  with  absolute  assurance  that  the  Federal 
Trade  Gmimission  will  protect  him  against  any  act  of  his 
big  competitor  that  constitutes' unfair  competition  or  restraint 
upon  his  export  trade." 


Chapter  XI 
HOW  TO  QUOTE  PRICES 

**One  price  to  all"  poor  policy — System  of  discounts  should 

BE  FLEXIBLfi — QUOTING  PUCES  IN  AmE&ICAN  CURRENCY — QUO- 
TATION SYMBOLS  MUST  NOT  BE  ObHFUSBD-*MEANING  OP  IHFfER* 
BNT  SYMBOLS — ^METHOD  OF  COMPUTING  C.  I.  P.  PBICES— -T^MS 

UPON  WHICH  GOODS  ARE  SOLD 

There  are  two  things  that  the  American  manu&ctcirer  must 
not  do  in  quoting  prices  to  foreign  customers.    One  is,  he 

must  not  make  one  price  for  any  and  all  merchants  engaged 
in  the  re-sale  of  goods  in  foreign  countries.  He  must  be  care- 
ful to  draw  the  line  hHween  the  importer,  wholesaler  and  re- 
tailer in  a  foreign  country  as  wdl  as  the  export  merchant  at 
home.  If  he  is  going  to  do  business  with  the  exporter  at  one 
of  our  American  ports  the  latter  alone  should  know  the  manu- 
facturer's export  price,  and  so  on  down  the  line.  The  mer- 
chant who  buys  from  the  manufacturer  is  entitled  to  protection. 
The  iMrice  at  which  be  buys  from  the  manuf actnrer  should  not 
be  revealed  to  the  merchant  to  whom  he  sells  the  goods. 

The  second  thing  that  the  manufacturer  must  not  do  is  en- 
deavor to  dictate  the  retail  price  of  an  article  to  be  sold  in  a 
foreign  country.  When  it  is  remembered  that  the  importer 
must  face  a  number  of  additional  charges  at  the  other  end 
snch  as  imp<»t  duties,  dock  dnes,  commis^ms  to  custom- 
house brokers  as  well  as  risks  due  to  a  fluctuating  currency 
in  a  foreign  country  to  which  the  goods  are  shipped  the  jus- 
tice of  this  policy  will  be  recognized.  It  is  evident  that  the 
imposition  of  an  arbitrary  retail  price  beyond  which  the  mer- 
dbaat  may  not  go  would  be  highly  impracticable. 

System  of  Discounts 
Should  Be  FUxibU 

A  flexible  S3rstem  of  discounts  is  usually  necessary  for  the 

148 


HOW  TO  QUOTE  PRICES 


purpose  of  quoting  different  prices  to  variotss  merchants  in- 
volved in  the  re-sale  of  goods.  These  discounts  range  as  high 
as  40  per  cent  and  as  low  as  10  per  cent.  They  are  generally 
determined  by  the  character  of  the  business  in  which  the  cus- 
tomer is  engaged.  Importers,  wholesalers  and  retailers  who 
ask  quotations  from  manufacturers  are  subject  to  varying  dis- 
counts. The  quantity  of  goods  purchased  during  the  year,  and 
the  territory  in  which  the  customer  is  located,  may  also  de- 
termine the  amount  of  the  discount.  With  reference  to  ter- 
ritory it  must  be  remembered  that  it  is  more  costly  to  develop 
business  in  spaiaely  settled  regions  of  the  world  than  it  is  in 
the  more  thickly  settled  and  prosperous  sec^ons.  The  manu- 
facturer who  sells  goods  in  London  may  quote  a  lower  price 
to  the  British  merchant  than  to  the  Siberian  or  the  merchant 
from  Punta  Arenas. 

Quoting  Prices  m 
AmerieoH  Cwreney 

If  a  customer  desiies  to  be  quoted  in  the  currency  of  his 
own  country  the  manufacturer  should  do  so,  only  he 

must  be  careful  that  due  allowance  is  made  in  the  rate  of  ex- 
change at  which  the  foreign  money  is  converted  into  American 
dollars.  Also,  if  the  foreign  customer  requests  that  the  value  of 
the  invoice  be  collected  in  the  currenqr  of  his  country  or  in 
some  foreign  well-known  currency,  such  as  llie  marie,  franc  or 
pound  sterling,  the  manufacturer  should  do  so  but  with  the 
understanding  that  the  value  of  the  invoice  will  be  converted 
into  the  currency  desired  at  the  rate  of  exchange  prevailing  in 
New  York  or  in  some  other  dty  when  the  shipment  is  made  so 
that  he  may  obtam  the  exact  equivalent  in  American  doUars.- 

QuoMions  Should 
Be  UnderskmdabU 

When  the  manufacturer  quotes  a  price  on  a  certain  article 
the  customer  at  the  other  end  should  know  exactly  what  he 
means.  There  should  be  no  room  for  doubt.  Neither  should 

the  customer  be  compelled  to  write  or  cable  for  further  in- 
formation. This  not  only  means  delay,  but  causes  unneces- 
sary expense.  In  order  to  avoid  this  the  manufacturer  should 
be  sure  that  the  following  points  are  written  down  in  black 
and  wUtt  on  qnotatkm  forms  wfaidi  he  may  distribute: 


144  EXPORTING  TO  THE  WORLD 


(a)  Description  of  merchandise;  (b)  Quotation  of  prices 
in  an  understandable  manner;  (c)  Name  of  city  where  goods 
are  to  be  delivered:  (d)  The  kind  of  packing,  and  charges 
made  for  special  kinds;  (e)  Date  of  shipment;  (f)  Liabilities 
that  manufacturer  will  assume ;  (g)  Liabilities  that  customer 
will  assume :  (h)  Liability  of  manufacturer  due  to  delays  be- 
yond his  control;  (i)  Form  of  marine  insurance  to  be  taken 
out;  ti)  Terms  oi  Payment;  (k)  Routing  of  shipment;  (1) 
Methods  of  shipment  in  absence  of  vpedAc  instnictioiit. 

Quotation  Symbols 
Must  Not  Be  Confused 

There  is  much  confusbn  in  the  use  of  qrmbols  for  quoting 
prices  to  foreign  customers.  For  instance,  the  symbol  "F. 
O.  B."  means  "free  on  board"  and  when  used  in  export  trade 
it  should  mean  "free  on  board  vessel,"  that  is  to  say,  all 
charges  involved  in  getting  the  goods  on  board  the  ship  are 
to  be  paid  by  the  shipper.  In  quoting  "F.  O.  B.  Factory"  or 
*F.  O.  B.  New  Yotk,"*  however,  manufacturers  generally  mean 
that  the  goods  will  be  placed  free  on  railroad  cars  or  mland 
freight  charges  are  to  be  paid  to  New  York,  but  all  expenses 
in  hauling  the  goods  from  the  railroad  cars  and  getting  them 
on  board  the  steamer  must  be  borne  by  the  customer.  It  is 
necessary,  tlierefore,  when  quoting  "F.  O.  B."  that  the  ship- 
per qualify  the  symbol  with  additKMial  mlormation.  The 
buyer  must  know  whether  "F.  O.  B.  Factor/*  means  that 
he  must  pay  the  freight  from  the  factory  to  the  port  of  ship- 
ment, whether  "F.  O.  B.  New  York"  means  that  he  must  pay 
lighterage  and  other  incidentals  involved  in  getting  the  goods 
on  the  steamer,  or  whether  ''F.  O.  B.  Vessel"  means  that  he 
is  relieved  from  these  additional  expenses.  The  latter  quota- 
tion is  the  proper  one  to  use  in  export  trade  as  it  is  difficult 
for  a  foreign  buyer  to  calculate  the  freight  charges  from  fac- 
tory to  port  of  shipment  and  other  incidentals  involved  in 
getting  ^  freight  into  the  hold  of  the  steamer.  The  shipper 
should  do  this  for  him. 

**F.  A.  S."  (free  alongside)  is  another  expression  that  needs 
explaining.  An  "F.  O.  B.  Vessel"  quotation  includes  all 
charges  of  loading  goods  on  steamer.  An  "F.A.S.  Vessel" 
quotatioo  tndndes  all  chaiges  except  tiioae  invdved  in  hoist- 


HOW  TO  QUOTE  PRICES  1« 


ing  goods  of  an  extremely  heavy  character  into  the  steamer. 
When  extra  charges  for  loading  heavy  goods  into  the  steamer 
aie  imminent,  the  shipper  makes  an  "F.  A.  S.  Vessel"  quotas 
tion  unless  he  is  willing  to  pay  the  extra  charges  himself. 
Failure  to  make  this  distinction  in  quoting  prices  may  lead  to. 
financial  loss. 

C.  /.  F.  Quouuian 
In  Bxfart  Trade 

The  symbol  "C.  I.  F."  means  cost,  insurance  and  freight 
In  quoting  prices  on  a  "C.  I.  F."  basis  the  manufacturer 
agrees  to  pay  all  charges  involved  in  getting  the  goods  on 
board  the  steamer,  the  marine  insurance  premium,  and  the 
freight.  All  other  charges  such  as  ccmsular  fees,  etc.,  not  in- 
cluded in  the  *'C.  I.  F."  quotation  must  be  borne  by  the  cus- 
tomer. In  quoting  "C.  I.  F."  the  manufacturer  should  inform 
the  customer  as  to  the  kind  of  marine  insurance  to  be  taken 
out,  and  in  time  of  war  whether  it  involves  a  war  risk  clause. 

To  the  foreign  customer  a  •'C  I.  F."  quotation  is  the  most 
attractive.  Knowing  what  goods  will  cost  him  at  the  port  of 
destination  he  can  easily  calculate  what  the  charges  at  the 
home  port  will  amount  to.  Knowing  approximately  what  the 
total  cost  will  be  he  can  then  quote  a  definite  price  to  his  cus- 
tomer without  delay. 

In  quoting  "C.  I.  F."  however,  the  shipper  assumes  the 
following  risks : 

Loss  from  fluctuatacm  of  charges  involved  in  placing  goods 
on  ship. 

Loss  from  fluctuation  of  rates  in  marine  insurance. 
Loss  from  fluctuation  of  ocean  freight  rates. 

Hm»  Merchtmts 
Profit  on  C.  I.  F. 

On  the  other  hand,  however,  a  sudden  drop  of  freight  or  in- 
surance rates  may  mean  an  increased  profit  to  the  shipper. 
As  a  matter  of  fact,  some  American  exporters  make  their  *'C. 
I.  F."  quotations  so  dose  that  they  usually  depend  on  the 
dianging  freight  and  insurance  rates  to  drop  in  their  favor. 
Their  profits  are  obtained  from  the  difference  at  which  diey 


t4M  EXPORTING  TO  THE  WORLD 


booked  the  freight  and  marine  insurance  and  the  final  price 
that  was  paid.  Inasmuch  as  there  is  considerable  risk  in- 
volved in  quoting  "C.  I.  F/'  prices  it  is  necessary  to  limit  such 
quotatioiis  to  a  certain  time  only,  as  a  protection  to  the  shipper. 
In  order  to  expedite  the  doting  of  deals  on  a  ''C.  I.  F."  basis 
the  cable  Is  usually  resorted  to,  and  an  answer  by  the  same 
method  is  generally  requested.  When  quoting  by  mail  on  a 
"C.I.F."  basis  an  immediate  reply  by  letter  or  by  cable  is  asked. 

The  shipper  who  quotes  a  ''C  I.  F."  prioe  is  re^Kmsibk  for 
tlie  ioUowtng: 

Delivery  to  shipping  point. 

Delivery  of  goods  on  vessel  and  payment  of  freight  charges 
and  insurance  premium. 

It  should  be  noted  that  the  shipper  is  not  responsible  for 
the  delivery  of  the  goods  to  destination.  If  the  goods  arrive  in 

a  damaged  condition  or  are  lost  the  customer  must  pay  for 
them,  nevertheless.  He  must  obtain  satisfaction  from  the  car- 
rier or  the  insurance  company*  not  the  manufacturer. 

C.  I.  F.  and  F.  O.  B. 

There  is  greater  liability  in  quoting  an  F.O.B.  point  of  ship- 
ment than  a  C.  I.  F.  destination  as  af^pears  from  an  article  in 
the  Bulletin  of  The  American  Mann&cturers'  Association  by 

A.  M.  Fisher,  in  which  he  says: 

"The  world,  or  at  least  part  of  it,  is  talking  of  efficiency. 
The  CI.  F.quotation  is  advantageous  and  desirable  because  it 
is  more  efficient  than  the  usual  quotation  F.  O.  B.  shipping 
point.  There  ate  several  reasons. 

"It  is  well  to  understand  the  difference  between  the  C.  I.  F. 
price  and  the  F.O.B.  price  and  also  to  understand  the  difference 

A  leelriBa  of  interest  to  mmmdmdlmnn  and  exporfni  wfts  recently  fCsdcMd 

by  a  Canadian  court  relating  to  the  commercial  expression,  "F.  O.  B."  The 
court  made  it  a  ruling  as  to  the  significance  of  the  term.  The  court  held  that 
tfM  tem  mt  Board"  means  that  Utt  seller,  at  his  expenw^  places  his  goods 

on  the  car  or  vessel  which  is  to  carry  them  from  the  point  specified,  and  that 
the  buyer  takes  the  risk  onwards ;  at  the  same  time  ths  goods  must,  at  destina- 
tion be  in  coirfonBtty  with  conditions  of  sale  or  tfMT  nay  bo  legally  rejected. 
Further,  it  is  necessary  to  distinguish  delivery  from  acceptance ;  for  said  the  court : 
**The  carrier  is  the  agent  of  the  purchaser,  but  his  mandate  is  limited  to  the 
transportation  of  the  goods.  The  question  to  decide  is  whotlMr  it  was  tfM  tiring 
sold  that  was  carried  from  the  point  of  shipment.  If  the  vendor  has  correctly 
delivered  the  thing  sold,  the  buyer  becomes  the  proprietor  immediately.  If  he 
deHiwef  aomethiair  elee  for  instance  if  he  has  sold  goods  of  first  quality  and 
delivers  goods  of  second  quality — there  is  no  delivery  of  the  thing  aoU.  TlM 
buyer  can  refuse  them  only  when  they  arrive  at  their  destination." 


HOW  TO  QUOTE  PRICES  147 


as  to  risks.  A  C.I.F.  price  quoted  for  a  foreign  port,  indudes 
the  cost  of  the  goods  F.O.B  steamer,  the  marine  insurance 
charges  and  the  steamer  transportatkm  charges,  to  the  lordgn 
port  in  accordance  with  the  terms  of  the  hills  of  lading.  An 
F.O.B.  price  is  understood  to  be  a  price  at  point  of  sail,  unless 
Stipulated  otherwise.  By  stipulatioii  it  may,  of  course,  be 
effective  at  any  point  nominated. 

-'C.  I.  F.  London  and  F.  O.  B.  London  are  two  very  diffetent 
things,  as  far  as  risk  is  concerned.  The  F.  O.  B.  quotation, 
as  a  rule  includes  all  of  the  risks  of  the  C.  I.  F.  quotation,  and 
in  addition  covers  other  risks.  A  quotation  P.  O.  B.  New 
York  as  opposed  to  a  quotation  C.  L  F.  London,  on  a  ship- 
ment destined  to  London,  will,  as  a  rule,  in  practice,  mvolve 
more  risks  than  the  CL  F.  quotatkxL 

'^itfa  a  C  J.F.  price  no  liability  is  involved  beyond  the  cost 
cf  the  goods  and  the  prepayment  of  the  insurance  and  frdg^ 
charges.  These  prepayments  are  not  mandatory  however,  if 
the  amounts  are  allowed  to  be  deducted.  With  the  C.  L  F. 
quotation  damage  or  loss  after  shipment  does  not  accrue  in 
any  way  against  the  shipper  save  on  proof  of  n^llgenee» 
.which,  of  course,  is  not  voided. 

*'With  the  F.  O.  B.  price  all  liabilities  are  with  the  shipper 
until  delivery  is  made  in  accordance  with  the  quotation  stipu- 
latkML  If  the  stipulation  covers  delivery  at  a  foreign  port  the 
risk  is  conmderable.  If  it  covers  delivery  at  point  of  ship- 
ment it  practically  amounts  to  the  same  thing  as  a  C.  I.  F. 
price  in  view  of  the  usual  practice  of  the  steamship  companies 
and  insurance  companies  to  require  prepayment  of  charges. 

"The  donents  of  the  CJJF.  price  will  fairly  be  covered  by 
the  following: 

"Cost:  The  price  of  the  goods  F.  O.  B.  steamer,  including 
initial  factory  price,  rail  carriage  to  port  of  shipment,  truck- 
ing or  lighterage  to  steamer,  derrick  charges  or  lifting  into 
steamer  if  extra  heavy  or  bulky,  charges  due  to  spedal  haz- 
ards, probable  storage  charges,  at  port  of  shipment,  draw- 
back, if  any,  consular  charges,  and  petties  and  postage. 

"Insurance:  The  premium  charge  covering  a  nominated 
period  of  time,  perhaps  both  before  and  after  the  voyage. 

'Treigfat:  All  steamer  diarges  covering  shipments  to  destina- 
tion in  accordance  with  the  terms  ol  the  biii  of  lading  and  the 


148  EXPORTING  TO  THE  WORLD 


customary  rules  of  the  outward  port  as  to  the  interpretation 
put  ttpon  the  terms  of  the  biU  of  lading. 

**l  have  said  that  the  C  I.  F.  price  is  more  efficient  than 
F.O.B.  price  made  at  the  lading  port,  as  is  usually  done.  This, 
you  will  readily  understand  when  you  consider  the  condition 
at  the  foreign  port  and  also  the  logic  as  to  the  seller's  obligations. 

"As  to  cost:  The  foreign  haytr,  if  quoted  at  the  factory^  has 
no  means  of  knowing  the  cost  of  rail  or  domestic  carriage.  If 
quoted  F.  O.  B.  cars  port  of  shipment  the  foreign  buyer  has  no 
means,  except  perhaps  some  bitter  experiences,  which  enable 
iiim  to  know  or  judge  as  to  the  charges  for  such  matters  as 
tracidng,  lighterage,  derrick  or  lifting  hazards,  storage, 
drawback,  coosttlar  leqatrements,  to  saj  nothing  of  pctties 
and  postage. 

"As  to  insurance:  He  has  no  means  of  knowing  the  insur- 
ance rates  or  the  premium  amounts  owing  to  a  lack  of  knowl« 
edge  of  other  elements. 

*'As  to  freight :  He  is,  as  a  mle,  unable  to  obtahi  a  quotation 
oi  an  outward  freight  rate  at  an  inward  port ;  that  is,  a  steam- 
ship quotation  from  New  York  will  not  be  given  in  Mel- 
bourne, but  will  be  referred  to  New  York.  This  is  a  general 
practice  of  tbe  steamship  companies.  They  publish  no  tariffs 
as  do  our  domestic  common  carriers.  Also,  manufacturers 
frequently  make  serious  errors  in  stating  the  gross  weight, 
net  weighty  legal  weight,  and  the  cubic  measurement  of  their 
products.  This,  of  course,  is  an  essential  piece  of  infor- 
mation In  figuring  laid  down  costs  in  foreign  markets.  In 
many  cases  the  American  manufacturers  give  no  Informa- 
tion related  to  this  important  matter,  although  they  believe 
themselves  to  be  making  serious  efforts  toward  a  development 
of  their  export  trade.  It  has  come  within  my  experience  to  see 
errors  of  over  100  per  cent,  as  to  we^ts  and  measnrementu, 
and  substantial  differences  were  frequent  enough  to  inspire 
profanity.  It  is  a  practical  waste  of  time  to  make  quotations 
of  any  sort  unless  some  idea,  within  safe  limits,  is  given  as  to 
weights  and  measurements. 

"Yon  will  appreciate  from  the  fcmgoii^  that  the  foreign 
bu3rer  Is  at  a  distinct  disadvantage  unless  prices  are  quoted 
C.I.F.  owing  to  conditions  beyond  his  control.  The  result  is 
that  their  interests  are  more  often  in  what  may  be  termed 
'heavy'  or  'standard'  lines,  rather  than  what  may  be  termed 


HOW  TO  QUOTE  PRICES  149 


'specialty'  lines.  But  few  of  the  members  of  this  association 

are  offering  what  I  would  term  the  'heavy*  lines;  most  of  you 
are  offering  specialties.  As  a  rule  the  heavy  lines  are  quoted 
CJ.F.,  and,  I  believe,  it  is  true  that  most  of  the  specialty  lines 
are  quoted  F.O.B  lading  port  by  the  manufacturer.  The  sell- 
ers, being  yourselves,  are  able  to  get  all  of  the  Information 
required  for  the  making  of  CJ.F.  quotations  promptly  and 
with  certainty  and  little  risk.  If  the  elements  arc  combined 
into  the  C.I.F.  price,  the  buyer,  who  is  really  representing  your 
Interests,  has  his  time  conserved.  His  risks  are  materially 
reduced  and,  incidentally,  he  is  wiUing  to  work  on  lesser  unit 
profit,  thereby  enhancing  the  vdume  of  business  placed  with 
you.** 

When  the  manufacturer  quotes  "C.  &  F."  he  means  cost 
and  freight,  the  insurance  being  eliminated. 

Quoting  "C  A.  F."  should  be  avoided  as  it  does  not  mean 
*'Cost  and  Freight"  in  fore^  countries.  Instead,  it  is  sub- 
ject to  the  French  interpretatkm  of  "cost,  assurance  and 
freight,"  which  is  the  equivalent  to  "C.  I.  F."  as  "assurance" 
is  the  French  word  for  "insurance." 

In  some  ooontrles  the  expense  involved  in  exchange  is  in- 
cluded in  the  qnotatkm  of  prices.  The  American  manufac- 
turer who  wishes  to  include  exchange  in  quoting  prices  to  a 
customer  in  Australia  or  in  South  Africa  where  the  erohange 
is  usually  figured  in  should  use  the  following  symbol :  "C.  I. 
F.  &  E."  which  means  "cost,  insurance,  freight  and  exchange." 
••C  I.  F.  I.  &  E,"  means  that  interest  is  added,  while  "C  I. 
F.  &  C  means  tiiat  commisskm  is  to  be  included. 

Method  of  Computmg 
"C.  /.  F."  Pnees 

In  computing  "C.  I.  F."  prices  the  manufacturer  must 

know: 

The  approximate  cost  of  a  given  weight  of  goods  delivered 
on  board  the  steamer  at  the  port  of  shipment. 

The  cubic  measurements  and  gross  weights  of  packages. 

The  approximate  ocean  freight  rate  to  be  paid. 

To  make  up  the  "C.  I.  F."  cost  of  a  certain  shipment  of 
goods  the  manufacturer  must: 

Compute  the  railroad  freight,  cartage,  and  other  charges 
incurred  in  placing  the  goods  on  board  the  steamer. 

Calculate  the  ocean  freight  tiiat  Is  to  be  paid. 


m  EXPORTING  TO  THE  WORLD 

Include  the  marine  insurance. 

If  the  shipment  involves  a  hundred  gross  of  a  certain  article 
it  will  not  be  difficult  to  quote  m  price  per  gross      I.  F." 

Quotations  Acceptable 
to  the  Customers 

There  are  certain  foreign  markets  in  which  business  may 
only  be  obtained  by  quoting  prices  delivered  at  the  customer's 
warehouses.  The  Germans,  who  have  made  a  study  of  export 
technique  as  thoronglily  as  any  people  in  the  world,  have  been 
able  to  meet  such  conditions.  In  some  markets,  however,  cus- 
tomers arc  able  to  handle  merchandise  more  favorably  when 
quotations  are  F.O.B.  port  of  shipment  or  C.I.F.  port  of  arrival. 
The  Germans,  always  looking  for  opportunities  to  develop  and 
retain  their  trade,  have  met  these  peculiarities  in  a  manner 
satisfactory  to  the  people  they  were  doing  business  with. 
Quoting  prices  in  a  manner  acceptable  for  the  customer  repre- 
sents only  one  of  the  little  things  that  the  Germans  have  gone 
out  of  the  way  to  accomplish  in  order  to  obtain  their  great 
foreign  trade. 

The  necessity  of  making  intelligent  quotations  to  Imeign 
customers  is  paramount  This  is  fllustrated  m  a  Bureau  of 
Fore%n  and  Domestic  Gnnmerce  report  on  "Markets  for  Agri- 
cultural Implements  and  Machinery  in  Argentina"  by  Frank 

H.  von  Motz,  which  says: 

"Manufacturers  who  want  to  enter  the  Argentine  or  any 
other  foreign  market  should  arrange  to  quote  prices  for  their 
product,  properly  boxed  for  export  diipment,  and  delivered 
F.  A.  S.  New  York  City.  No  single  thing  leads  to  so  much 
trouble  as  the  quoting  of  prices  F.  O.  B.  cars  at  factory,  F. 
O.  B.  cars  in  New  York  City,  or  in  any  other  place.  The  for- 
eign merchant  wants  to  know  what  the  goods  he  intends  pur- 
chasing are  going  to  cost  him  F.  A.  S.  m  New  York  Harbor, 
so  he  can  figure  the  landed  cost  at  his  port. 

'*In  normal  times,  prior  to  the  war  in  Europe,  Buenos  Aires 
importers  of  implements  generally  figured  that  1^5  per  cent 
added  to  the  cost  FJV.S  in  New  York  Harbor  would  allow 
enous^  margin  to  pay  all  costs  inctdent  to  putthig  the  goods 
in  a  wardiouse  in  one  of  tiie  three  port  cities  hi  Argentina. 

•In  other  words,  the  price  F.A.S.  in  New  York  Harbor,  witli 
?5  per  cent,  added,  represents  the  landed  cost  in  an  Argentine 
port  These  figures  seem  somewhat  high,  but  as  the  majority 


HOW  TO  QUOTE  PRICES  151 


of  the  importing  houses  figure  their  landed  costs  in  that  way 
it  is  best  to  use  the  figures  they  do.  To  the  landed  cost  56 
per  cent,  is  added  to  find  the  list  price,  which  is  also  the  retail 
price.  To  dealers  a  discount  of  15  per  cent,  is  given,  with  an 
additional  discount  of  5  per  cent  for  cash  in  30  dajrs. 

"In  the  case  of  repairs  a  different  method  is  used.  With  the 
exception  of  a  few  very  necessary  repairs,  the  nature  of  which 
causes  them  to  wear  out  very  rapidly  and  on  which  special 
prices  are  given,  the  American  manufacturers'  list  price  is 
multiplied  by  five,  and  the  result  is  the  Argentine  list  price  in 
paper  moneys  In  other  words^  a  repair  listed  at  $1  in  the 
American  manufacturer's  catalogue  is  listed  at  $5.00  Argen- 
tine paper  in  the  Argentine  importers'  catalogue.  An  Argen- 
tine paper  dollar  is  worth  $0.4246  American  money,  therefore 
the  Argentine  list  price  is  $2.12  American  money. 

^Dealers  get  a  discount  of  15  per  cent»  with  an  additional 
discount  of  5  per  cent,  for  cash  in  30  days.  As  most  American 
manufacturers  allow  a  discount  from  list  of  60  per  cent,  or 
even  more,  a  repair  listed  in  the  American  catalogue  at  $1  can 
be  placed  in  a  warehouse  by  the  Argentine  importer  at  a  price 
which  does  not  exceed  $0.63.  If  the  repair  sold  at  retail,  the 
selling  price  is  $S.18;  if  at  wholesale,  the  seUuig  price  is  $1.71, 
assuming  that  advantage  is  taken  of  a  cash  discount** 

Tmms  Ufim  Whkk 
Goods  Are  Sold 

In  the  United  States  ''net"  means  payment  without  dis- 
count 

In  England  *terms  cash"  means  payment  within  one  or  two 

days. 

In  the  same  country  "ready  cash"  means  payment  within 
five  or  ten  days. 

The  British  also  offer  a  discount  of  from  two  to  two  and 
one^half  per  cent  for  cash  paid  within  five  to  ten  days  of  de- 
livery of  goods. 

The  Germans  ordinarily  give  thirty  days  with  two  per  cent 
discount  or  90  days  net. 

In  Germany  and  France  the  practice  has  been  to  include  a 
90  day  note  with  the  invoice  to  customers  who  returned  ihm 
to  the  sellers  properly  accepted.  This  is  common  also  in 
Canada.  Such  method  is  practicable  where  an  open  credit 
business  is  conducted. 


15d  EXPORTING  TO  THE  WORLD 


Reforms  Urgtd  in  Makmg 
Standardized  Quotations 

B^ore  dosing  this  chapter  it  might  be  well  to  call  attention 

to  the  movement  initiated  by  the  leading  export  organizations 
of  the  country,  such  as  the  National  Foreign  Trade  Council,  the 
American  Manufacturers'  Export  Association,  the  American  Im- 
porters' and  Exp(Mrters'  Association  and  others,  to  standardize 
and  clarify  export  quotations  so  as  to  prevent  misunderstand- 
ings as  to  their  true  meaning.  It  is  common  knowledge  among 
exporters  in  this  country  that  confusion  arising  from  the  mis- 
understanding and  misinterpretation  of  quotations  has  been 
the  cause  of  the  loss  of  thousands  of  dollars  annually  both  to 
buyer  and  seller.  It  is  the  purpose  df  the  above  mentioned 
organizations  to  bring  about  a  reform  in  this  important  detail 
so  as  to  simplify  it  to  that  point  where  even  the  least  experi- 
enced merchants  engaging  in  foreign  trade  may  easily 
master  it. 

At  a  meeting  in  December,  1919,  the  organizations  men* 
tioned  gathered  at  a  conference  in  New  York,  and  a  tecooH 
mcndation  by  the  National  Association  of  Manufacturers  call- 
ing for  the  abandonment  of  all  the  abbreviated  terms  in  favor 
of  writing  the  words  out  in  full  was  adopted.  The  action 
taken  at  this  conference,  however,  can  only  be  in  the  nature 
of  a  recommendation  where  there  are  so  many  engaged  in  the 
trade  throughout  the  country.  Reliance  is  placed  upon  the 
trade  organizations  to  conduct  a  campaign  of  education  look- 
ing to  the  adoption  of  the  proposed  changes. 

New  Methods  of  Making 
QmiaJtums  Are  Adopted 

Tbe  export  quotations  finally  passed  upon  and  adopted  were 
as  follows: 

F.  O.  B.  (Named  Point). 

1.  When  the  prices  quoted  applies  only  at  shipping  point, 
and  the  seller  merely  undertakes  to  load  the  goods  m  or  in 
cars  or  lighters  furnished  by  the  raikoad  company  servis^ 
the  industry,  or  most  conveniently  located  to  the  industry, 
without  other  designation  as  to  routing,  the  proper  term  is : 


HOW  TO  QUOTE  PRICES 


153 


**F.  O.  B.  (named  point)".   (F.  O.  B.  cars,  mills,  works 

and  factories  all  have  the  same  meaning  and  obligation.) 
Under  the  quotation: 

(a)  Seller  must  (1)  place  goods  on  or  in  cars  or  lighters,  (2) 
secure  railroad  bill  of  lading,  (3)  be  responsible  for  loss 
and,  or  damage  until  goods  have  been  placed  in  or  on  cars 
or  lighters  at  shipping  point,  and  clean  bill  of  lading  has 
been  furnished  by  the  railroad  company. 

(b)  Buyer  must  (1)  be  responsible  for  loss  and,  or  damage  in- 
curred thereafter,  (2)  pay  all  transportation  charges,  in- 
cluding taxes,  if  any,  (3)  handle  all  subsequent  movement 
of  the  goods. 

F.  .O.  B.  (Named  Point). 

Freight  prepaid  to  (named  seaboard  point). 
2.    When  the  seller  quotes  a  price  including  transportation 
charges  to  the  port  of  exportation  without  assuming  responsi- 
bility for  the  goods,  after  obtaining  a  dean  bill  of  lading  at 
point  of  origin,  the  proper  term  is: 

**F.  O.  B.  (named  point)  freight  prepaid  to  (named  point 
on  the  seaboard)." 
Under  this  quotation: 

(a)  Seller  must  (1)  place  goods  on  or  in  cars  or  lighters,  (2) 
secure  bill  of  lading,  (3)  pay  freight  to  named  port,  (4) 
be  responsible  for  loss  and,  or  damage  until  goods  have 
been  placed  in  or  on  cars  or  lighters  at  shipping  point, 
and  clean  bill  of  lading  has  been  furnished  by  the  railroad 
company. 

(b)  Buyer  must  (1)  be  responsible  for  loss  and,  or  damage  in- 
cunred  therei^ter,  (3)  handle  all  subsequent  movement  of 
the  goods,  (3)  unload  goods  from  cars,  (4)  transport 
goods  to  vessel,  (5)  pay  all  demurrage  or  storage  charges, 
(6)  arrange  for  storage  in  warehouse  or  on  wharf  where 
necessary. 

F.  O.  B.  (Named  Point)  Freight  Allowed. 

3.  Where  the  seller  wishes  to  quote  a  price,  from  which 
the  buyer  may  deduct  the  cost  of  transportation  to  a  given 
point,  without  the  seller  assuming  responsibility  for  the  goods 
after  obtaining  a  clean  bill  of  lading  at  point  of  origin,  the 
proper  term  is: 


IH  EXPORTING  TO  THE  WORLD 


**F.  O.  B.  (named  point)  Freight  Allowed  To  (named 
point  on  the  seaboard).** 
Under  this  quotation: 

(a)  Seller  must  (1)  place  goods  oil  or  in  cars  or  lighters,  (B) 
secure  railroad  bill  of  lading,  (8)  be  respcmstble  for  loss 
and»  or  damage  until  goods  have  been  placed  in  or  on 
cars  or  lighters  at  shipping  point,  and  clean  bill  o£  lading 
has  beea  furnished  by  the  railroad  company. 

(b)  Buyer  must  (1)  be  responsible  for  loss  and,  or  damage  in- 
curred thereafter,  (2)  pay  all  transportation  charges  (buy- 
er is  then  entitled  to  deduct  from  the  amount  of  the  in- 
voice the  freight  paid  from  shipping  point  to  named  port), 
(3)  handle  all  subsequent  movement  of  the  goods,  (4) 
unload  goods  from  cars,  (5)  transport  goods  to  vessel, 
({))  pay  all  demurrage  charges  and,  or  storage,  (7)  ar- 
range for  storage  in  wardionse  or  on  wharf  where 
ttecessarVa 

F.  O.  B.  Can  (Naowd  Point  on  Seabomd). 

4.  The  seller  may  desire  to  quote  a  price  covering  the 
transporution  of  the  goods  to  seaboard,  assuming  respcmsi- 
bility  for  loss  and,  or  damage  up  to  that  point  In  this  case 
the  proper  term  is: 

**F.  O.  B.  cars  (named  point  on  seaboard)." 
Under  this  quotation: 

(a)  Seller  must  (1)  place  goods  on  or  in  cars,  (2)  secuie  rail- 
road bill  of  lading,  (a)  pay  all  freight  charges  from  point 
of  shipment  to  port  on  seaboard,  (4)  be  responsible  for 
loss  and,  or  damage  until  goods  have  arrived  in  or  on  cars 
at  the  named  port. 

(b)  Buyer  must  (1)  be  responsible  for  loss  and,  or  damage  in- 
curred thereafter,  (2)  unload  goods  from  cars,  (3)  handle 
all  subsequent  movement  of  the  goods,  (4)  transport 
goods  to  vessel,  (5)  pay  all  demurrage  charges  and,  or 
stxmge,  (6)  arrange  for  storage  in  warehouse  or  on  wharf 
where  necessary. 

F.  O.  B.  Cars  (Named  Port),  L.  &  L. 

5.  It  may  be  that  the  goods,  on  which  a  price  is  quoted 
covering  the  transportation  of  the  goods  to  the  seaboard,  con- 
stitute less  than  a  carload  lot  In  this  case  the  proper  term  is : 


HOW  TO  QUOTE  PRICES 


155 


"F.  O.  B.  cars  (named  port),  L.  C.  L.** 
Under  this  quotation: 

(a)  Seller  must  (1)  deliver  goods  to  the  initial  carrier,  (2)1 
secure  railroad  biU  of  lading,  (3)  pay  all  freight  charges 
from  point  of  shipment  to  port  on  seaboard,  (4)  be  re- 
sponsible for  loss  and,  or  damage  until  goods  have  arrived 
on  cars  at  the  named  port. 

'(b)  Buyer  must  (1)  be  responsible  for  loss  and,  or  damage  in- 
curred thereafter,  (2)  handle  all  subsequent  movements 
of  the  goods,  (8)  accept  goods  from  the  carrier,  (4)  trans- 
port  goods  to  the  vessel,  (5)  pay  all  demurrage  charges 
and,  or  storage,  (6)  arrange  for  storage  in  warehouse  or 
on  wharf  where  necessary. 

P.  O.  B.  Can  (Named  Port),  Lighterage  Free. 

6.  Seller  may  quote  a  price  which  will  include  the  expense 

of  transportation  of  the  goods  by  rail  to  the  seaboard,  includ- 
ing lighterage.   In  this  case  the  proper  term  is : 
"F.  O.  B.  cars  (named  port),  lighterage  free." 
Under  this  quotation : 
Xa)  Seller  must  (1)  place  goods  on  (or)  in  cars,  (2)  secure 
railroad  bill  of  lading,  (3)  pay  all  transportation  charges 
to,  including  lighterage  at,  the  port  named,  (4)  be  re- 
sponsible for  loss  and  (or)  damage  until  goods  have  arrived 
on  cars  at  the  named  port 

(b)  Buyer  must  (1)  be  responsible  for  loss  and  (or)  damage 
thereafter,  (2)  handle  all  subsequent  movement  of  the 
goods,  (3)  take  out  the  insurance  necessary  to  the  safety 
of  the  goods  after  arrival  on  the  cars,  (4)  pay  the  costs 
of  hoisting  goods  into  vessel  where  weight  of  goods  is 
too  great  for  ship's  tackle,  (5)  pay  aU  demurrage  and 
other  charges,  except  lighterage  charges. 

F.  A.  S.  Vessel  (Named  Port). 

7.  The  seller  may  desire  to  quote  a  price  covering  delivery 
of  the  goods  alongside  overseas  vessel  and  within  reach  of  its 
loading  tackle.   In  this  case  the  proper  term  is: 

"F.  A.  S.  Vessel  (named  port)." 
Under  this  quotation: 
(a)  Seller  must  (1)  transport  goods  to  seaboard,  (2)  store 


IM  £XPORXING  TO  THE  WORLD 

goods  in  warehouse  or  on  wharf  if  necessary,  unless  buy- 
er's obligation  includes  provision  of  shipping  facilities, 
(3)  place  goods  alongside  vessel,  either  on  a  lighter  or  on 
the  wharf,  (4)  be  reqioasible  for  loss  and  (<^)  damage 
nntil  goods  have  been  delivered  alongside  the  ship, 
fb)  Buyer  must  (1)  be  responsible  for  loss  and  (or)  damage 
thereafter,  (2)  handle  all  subseqnent  movement  ol  the 
goods,  (S)  pay  eott  of  hoisting  goods  into  vessel  irfwro 
weight  of  goods  is  too  great  for  ship's  tackle. 

F.  O.  B.  Vcssd  (Named  Port). 

a  The  seller  may  desire  to  quote  a  price  covering  an  ex- 
penses up  to  and  including  delivery  of  the  goods  upon  the 
overseas  vessel  at  a  named  port.  In  this  case  the  proper 
term  is: 

"F.  O.  B.  Vessel  (named  port)." 
C'F.^  O.  B.  named  port"  has  the  same  meaning  in  the  best 
practice,  but  should  be  avoided  altogether  to  prevent  misun- 
derstandings.) 

Under  this  quotation: 

(a)  Seller  must  (1)  place  goods  actually  on  board  the  vessel 
and  to  meet  all,  in  placing  goods  on  the  vessel,  charges 
incurred  thereby,  (2)  be  responsible  for  all  loss  and  (or) 
damage  until  goods  have  been  placed  on  board  the  vessel. 

(b)  Buyer  must  (1)  be  responsible  for  loss  and  (or)  damage 
thereafter,  (2)  handle  all  subsequent  movement  of  the 
goods. 

0»  mkl  Wm     amed  Poroigu  Pwt)* 


9,  The  seller  may  be  ready  to  go  further  than  the  delivery 
of  his  goods  upon  the  overseas  vessel  and  be  willing  to  pay 
transportation  to  a  foreign  point  of  delivery.  In  this  case  th« 
proper  term  is: 

^C.  and  F.  (named  fofd^  port)." 
Under  this  quotation: 

(a)  Seller  must  (1)  make  freight  contract  and  pay  transpor- 
tation charges  sufficient  to  carry  goods  to  agreed  destina- 
tion, (2)  deliver  to  buyer  or  his  agent  proper  bills  of 
lading  to  the  agreed  destination,  (8)  be  responsible  lor 
loss  and  (or)  damage  until  goods  have  been  delivered 
alongside  the  ship,  and  clean  ocean  bill  ol  lading  obtained. 


HOW  TO  QUOTE  PRICES 


(Seller  is  not  rei^Kmsible  lor  delivery  of  goods  at  desti- 
nation.) 

^b)  Buyer  must  (1)  be  responsible  for  loss  and  (or)  damage 
thereafter  and  must  take  out  all  necessary  insurance,  (2) 
pay  costs  of  discharge,  lighterage  and  landing  at  foreign 
port  of  destination  in  accordance  with  bill  of  lading 
clauses,  (S)  pay  foreign  customs  duties  and  wharfage 
charges,  (4)  handle  all  subsequent  movement  of  the  goods. 

C.  L  F.  (Named  Foreign  Port). 

10.  The  seller  may  desire  to  quote  a  price  covering  the 
cost  of  the  goods,  the  marine  insurance  cin  the  goods,  and  all 
transportation  charges  to  the  foreign  point  of  delivery.  In 

this  case  the  proper  term  is: 

"C.  I.  F.  (named  foreign  port)* 
Under  this  quotation: 

(a)  Seller  must  (1)  make  freight  oontraet  and  pay  freight 
charges  sufficient  to  carry  goods  to  agreed  destination, 
(2)  take  out  and  pay  for  necessary  marine  insurance  for 
buyer's  account,  (3)  be  responsible  for  loss  and,  or,  damage 
until  goods  have  been  delivered  alongside  the  ship,  and 
clean  ocean  bill  of  lading  and  insurance  policy  have  been 
delivered  to  the  buyer  or  his  agent  (seller  is  not  resp<»isi- 
ble  for  the  delivery  of  goods  at  destination  nor  for  pay- 
ment by  the  underwriters  of  insurance  claim),  (4)  seller 
to  provide  war  risk  insurance  when  necessary  for  buyer's 
account. 

(b)  Buyer  must  (1)  be  responsible  for  loss  and,  or,  damage 
thereafter  except  as  covered  by  insurance  and  must  make 
all  claims  to  which  he  may  be  entitled  under  the  insur- 
ance directly  on  the  underwriters,  (2)  pay  costs  of  dis- 
charge, lighterage  and  landing  at  foreign  port  of  destina- 
nation/  (3)  pay  foreign  customs  duties  and  wharfage 
charges. 

Shippers  are  reoonunended  to  clearly  understand  the  |Ht>- 
visions  of  their  insurance  protection  on  all  foreign  sales,  irre- 
spective of  the  general  terms  used  thereon.  In  almost  all 
cases  it  should  be  possible,  when  making  shipments  by 
steamer,  to  obtain  insurance  cover,  giving  full  protection  from 
primary  shipping  point  to  designated  seaport  delivery  and  on 
foreign  port  of  delivery,  as  ordinary  marine  insurance  under 
F.  P.  A.  conditkms,  L  e.,  free  ol  particular  average,  gives  no 


m  EXPORTING  TO  THE  WORLD 


protection  against  deterioration  and  (or)  damage  to  merchan- 
diae  while  in  tranrnt^  when  caused  hy  the  fecognized  hasards 
attending  snch  risks.  Shippers  should  endeavor  in  all  cases 

to  obtain  insurance  under  W.  P.  A.,  i.  c.,  with  particular  aver- 
ag^e,  when  in  excess  of  the  customary  franchise  of  3  per  cent, 
to  5  per  cent.  Under  such  form  of  insurance  underwriters  will 
be  called  upon  to  pay  claims  for  damages  when  these  eaneed 
llie  stiptilated  franchise* 

Emphasiets  NecessUy 

of^  Set  Ternts 

The  necessity  of  set  terms  in  quoting  prices  is  clearly  em- 
phasized by  John  F.  Fowler  in  "The  Americas,"  a  publicatioii 
ci  tiie  National  City  Bank  of  New  York  City,  who  says: 

'^In  sales  c.  i.  f.  to  a  port  the  buyer  often  pretends  that  he 
has  purchased  at  that  port;  and  this  quibble  is  a  common  trick 
to  shirk  the  goods  if  the  market  has  turned  adversely. 

"The  distinction  between  a  sale  'delivered  at  destination' 
and  a  sale  i.  1  to  the  port'  is  sharp  and  dear  to  both  the 
experienced  seller  and  buyer.  Bnt  the  ignorance  on  this  point 
is  amazing,  among  our  American  traders,  and  when  laxity  in 
practice  has  been  tolerated,  by  allowing  the  foreign  buyer  to 
imagine  or  infer  that  he  is  dealing  on  the  basis  of  'quote  de- 
livered at'  his  port,  the  exporter  is  breeding  trouble  for  him- 
•df,  aridng  from  the  oontlngendes  of  voyage  (which  belong 
absolutely  to  the  bnyer),  if  anjrthing  happens  beyond  the  risks 
covered  by  the  bill  of  lading  and  insurance.  Many  such  buy- 
ers throw  upon  the  seller  the  consequences  of  deterioration  in 
perishable  goods,  perhaps  from  the  delay  (arising  from  mis- 
hap) en  route,  and  for  which  the  seller  never  contemplated 
ally  re^ionsibili^. 

''Again,  say  a  sale  has  been  made  for  shipment  a  month  or 
two  later,  and  space  for  the  cargo  is  immediately  engaged  with 
the  steamship  line,  but  some  mishap  delays  the  boat  and  un- 
avoidably she  cannot  load  strictly  on  time.  Perhaps,  weltering 
weather  in  summer,  or  a  blizzard  in  winter,  delays  the  factory 
or  railway  or  local  steamboat;  or  an  ice-bound  harbor,  or  a 
strike  somewhere,  retards  the  shipment  for  a  week  or  fort« 
night.  The  sale  was  made  in  all  good  faith,  relying  upon  usual 
facilities  which  generally  operate  on  time,  but  something  un- 
controllable transpires,  between  sales  and  shipment  the  market 


HOW  TO  QUOTE  PRICES 


159 


has  fallen,  which  &ct  the  customer  is  sure  to  know,  but  he 
will  likely  await  arrival  of  the  goods  to  reject;  them  upon  his 

unhappy  seller,  or  else  exact  an  extortionate  allowance.  This 
is  bad  enough  in  the  case  of  staple  commodities,  but  if  ma- 
chinery or  other  goods  not  easy  of  sale,  the  exporter  is  certain 
to  suffer  heavily. 

Quoting  in  any  way  except  a  ''c  L  f basis  often  wories  a 
hardship  on  a  customer  who  lives  in  a  country  where  ocean 
freight  rates  are  constantly  fluctuating.  In  these  markets  it 
is  hard  to  do  business  unless  the  importer  knows  exactly  what 
the  goods  are  to  cost  him  landed  at  the  port,  and  he  is  unable 
to  determine  these  costs  unless  he  is  quoted  "c  L  i" 

The  disadvantagres  of  quottnir  in  anj  manner  exe^t  on  a  **c  L  V  tarif  kl^ 
the  Ceylon  market  is  told  by  Ralph  M.  Odell,  who  reported  to  the  Bureau  «! 
Foreign  and  Domeitic  Commerce  on  "Cotton  Goods  in  Celyon,"    He  says  in  part: 

•Tn  Cebron  as  in  othet  markets  of  the  world,  the  importer  stated  that  the 
liractice  of  /mericaa  mantcfMtwcrs  and  •Kporteia  1m  qaotiaff  goods  f .  o.  b.  Nev 
York  instead  of  c.  i.  f.  the  port  of  destination  made  it  very  hard  to  do  business.  It 
would  dottbtless  be  difficult  for  the  American  exporter  to  make  firm  offers  on  a 
e.  L  f.  bam  in  view  of  the  constant  fluctuations  in  freight  rates,  but  it  is  even  more 
diAodt  for  the  hayottw  Ctlfwi  to  SMeftda  ntM  of  frdgfat  mutrntud  fm  New 
York.  Inasmuch  as  present  transportatioo  charges  are  equal  from  eight  to  ten  per 
cent,  of  the  value  of  the  goods,  the  importer  is  afraid  to  take  chances,  particularly 
as  the  margin  of  profit  in  cotton  goods  is  very  small.  When  prices  are  quoted  f.  o. 
k  New  Ysti^  he  does  sot  haow  and  has  no  mcens  of  Meertaining  without  cablini^ 
to  the  exporter,  the  rate  of  freight  to  be  paid. 

**It  would  certainly  facilitate  American  trade  if  the  exporter  would  quote  prices 
c.  L  f.  Colombo  with  a  stipulation  that  they  were  subject  to  cable  confirmation. 
Freight  rates  aad  war  risk  iasttraace  on  shipments  from  Em-ope  are  changing  almost 
as  freqneathr  as  tfM  sates  fram  New  York  hot  in  s|^  of  this  fset  all  EnglUk  aad 
Continental  cotton  goods  are  still  being  sold  c.  i.  f.  Colombo.  I  explained  to  the 
importers  the  difHculties  which  American  exporters  meet  in  conforming  to  the 
practice,  and  while  they  appreciate  these  difficulties,  they  maintain  that  our  trade 
wmdd  be  wmOf  facBkated  if  we  eovld  ofweoMi  IImm  «id  qM  •  friee  m  aoods 
mmwA  hi  Hm  hMiw  §t  Cilirtn," 


CBAfTCR  XII 


FOREIGN  CREDITS 
Human  nature  same  the  world  over — Why  manufacturers 

tKTUSB  TO  SaCTSND  CUEDIT  OfVERSBAS — HiSTORY  OB  CXOm  IN  KMt- 
SIGN  BUSINESS — CREDIT  INFORMATION  NOT  DIFFICULT  TO  OB- 
TAIN— What  is  necessary  in  credit  information — Long 

CREDITS  NOT  NECESSARY  IN  EXPORT  TRADE — ^HOW  TO  COLLECT 
OVERDUE  ACCOUNTS  IN  lOKBIGN  FISLa 

All  the  crooks  and  "dead  beats"  in  the  world  are  not  to 
be  found  in  regions  outside  of  the  United  States.  Neither 
are  all  the  honest  folks  concentrated  in  this  country.  Yet 
the  novice  in  export  trade  upon  receiving  an  inquiry  or  an 
order  from  a  merchant  in  a  foreign  country  generally  demands 
cash  in  advance  before  he  permits  the  goods  to  leave  his 
hands.  He  has  formed  the  opinion  that  foreigners  are  not 
to  be  trusted.  There  is  another  Idnd  oi  a  novice  in  the  ex- 
port trade,  too.  He  is  the  exporter  who  become  so  enthusias- 
tic over  receiving  his  first  order  from  some  merchant  in  India 
or  in  South  Africa  that  he  immediately  makes  the  shipment 
withimt  consulting  the  credit  inlormatioa  sources  which  are 
available.  The  shipment  reaches  its  destination  but  the  re- 
mittance never  comes ;  and  the  novice  is  greatly  disappointed. 

Human  nature  is  very  much  the  same  the  world  over.  Busi- 
ness is  transacted  akMig  the  same  basic  principles.  There  are 
good  and  bad  accounts  in  fordgn  countries.  There  are  good 
and  bad  accounts  in  the  United  States.  Business  cannot  be 
transacted  without  credit,  however.  The  world's  greatest  export- 
ing nattoi^  have  developed  the  markets  ol  the  world  by  extending 
credit  American  manufacturers  and  exporters  have  extended 
credit.  The  pioneers  will  tell  the  novice  that  fewer  losses 
from  bad  accounts  have  been  recorded  against  foreign  cus- 
tomers than  against  domestic  buyers.  There  are  still  many 
Americaa  manu&cturers,  however,  who  have  not  learned  that 


160 


FOREIGN  CREDITS 


161 


risks  beyond  the  American  boundary  lines  are  just  as  safe  as 
those  within  our  borders. 

(Vhy  Manufacturers  Refuse 
to  Extend  CreM  Overseas 

There  are  probably  two  reasons  why  American  manufac- 
turers refuse  to  extend  credit  to  prospective  customers  in 
foreign  countries.  One  is  that  they  are  ignorant  that  there  are 
available  in  this  country  many  agencies  for  the  obtaining  of 
sufficient  reliable  credit  information  regarding  foreign  cus- 
tomers, and  the  other  is  that  American  manufacturers  are  not 
equipped  to  handle  this  kind  of  business.  They  do  not  wish 
to  assume  the  additional  burden  of  looking  up  credit  informa- 
tion, and  other  risks  involved  in  shipping  goods  to  a  fore^ 
country,,  and  in  the  collection  of  the  account.  Added  to  this 
is  the  necessity  of  obtaining  a  speedy  return  in  the  invest- 
ment involved  in  the  factory. 

History  of  Credit 
in  foreign  Business 

Before  proceeding  with  the  methods  by  which  an  American 
manufacturer  may  be  able  to  obtain  reliable  credit  informa- 
tion and  finance  shipments  without  the  necessity  of  tying  up 
capital  the  reader  should  have  a  general  idea  regarding  the 
growth  and  development  of  credit  in  the  commercial  relations 
between  nations. 

In  Special  Agent  Series,  No.  62,  of  the  United  States  Bu- 
reau of  Foreign  and  Domestic  Commerce^  Mr.  Archibald  J. 
VVolfe»  Commercial  Agent  for  the  Department  of  Commerce 
and  Labor  gives  this  interesting  bit  of  light  on  the  beginning 
of  credit  relations  between  exporters  in  Europe  and  importers 
ill  foreign  markets. 

'In  the  early  history  of  commercial  relations  between  the 
great  exporting  nations  and  the  countries  which  are  forced  to 
import  the  bulk  of  their  manufactured  goods,  and  therefore 
from  the  principal  'export  markets/  the  financing  of  export 
shipments  was  a  comparatively  simple  matter,"  says  Mr. 
Wolfe.  'The  European  exporter  maintained  branches  of  his 
own  within  the  sphere  of  his  activity  in  the  eaqK>rt  field.  He 


m  EXPORTING  TO  THE  WORLD 


supplied  the  goods,  the  foreign  or  local  branch  received  them 
and  distributed  them  among  the  local  dealers  or  consumers. 
Wkea  the  latter  were  able  to  pay,  the  distributing  house  was 
in  a  position  to  forward  the  proceeds  to  the  parent  house. 

"The  next  step  in  the  development  of  the  export  markets 
was  the  rise  of  independent  importers  abroad,  but  these  were 
abo  dependent  npon  the  receipt  of  proceeds  from  their  ots- 
tomm  before  being  able  to  settle  with  the  European  houses 
which  supplied  them  with  the  goods.  The  mode  of  payment 
on  the  part  of  the  local  customers,  however,  depended  upon 
the  purchasing  power  of  the  population,  and  that  in  its  turn 
hinged  upon  the  yield  of  harvest,  and  the  prices  realised 
abroad  for  native  produce. 

System  of  Barter 
is  Dying  Out 

''The  inevitable  progress  of  economic  development  has 
brought  about  certain  changes  in  the  relations  between  ex- 
porters, importers,  and  native  producers  in  the  export  mar- 
kets. Excepting  in  certain  sections  of  Africa  and  in  the  South 
Sea  Islands,  the  native  producer  no  longer  barters  his  produce 
against  his  demand  ioar  foreign  manufacturers  or  provisions, 
and  the  relation  between  harvests  and  the  purchasing  power 
is  less  visible  on  the  surface,  but  none  the  less  it  is  very  real 
In  Guatemala,  Venezuela,  and  Brazil,  for  instance,  this  inter- 
dependence of  purchasing  power  and  the  price  of  co&'ee  in  the 
world  markets  is  very  clearly  observable. 

It  is  impossible,  of  course,  to  adjust  automatically  the  si^ 
ply  ol  manufactured  inq>orts  to  the  purchasing  power  of  the 
country.  Yet  anyone  familiar  with  conditions  in  the  export 
markets  notices  the  feeling  of  hesitancy  in  ordering  goods  which 
pervades  the  entire  commerce  of  these  markets  just  before  the 
result  of  the  harvest  is  reliably  known. 

"Originally,  all  this  uncertainty,  the  risk  of  overstocking, 
tiie  liability  to  gauge  the  paying  capacity  of  the  local  trade, 
were  burdens  upon  the  shoulders  of  the  European  exporter. 
The  distributing  house  abroad  was  his  own  branch  establish- 
ment. Later  the  independent  importer  had  to  bear  the  risk 
of  being  unable  to  dispose  of  his  stock.  His  customers,  as  the 
result  of  a  bad  harvest,  might  fail  to  fulfill  their  obligations 


FOREIGN  CREDITS 


toward  him.  He  had  to  have  credit,  because  hb  alMlity  to  pay 

for  his  goods  depended  upon  the  payments  of  his  customers. 

**The  European  importers,  therefore,  granted  him  open 
credit  .This  means  that  the  shipments  from  Europe  were 
debited  against  the  importer,  leaving  him  a  considerable 
amount  of  latitude  in  settling.  This  latitude  was  generally 
the  subject  of  special  agreements. 

"The  credit  in  this  manner  is  elastic,  inasmuch  as  the  time 
of  the  settlement  by  the  importer  is  dependent  upon  the  time 
when  he  receives  payments  horn  his  customers.  Open  credit 
was  an  absolute  necessity  at  a  period  of  the  export  business 
when  the  shipments  from  Europe  had  to  be  balanced  against 
shipments  of  foreign  produce.  It  was  impossible  to  either 
provide  an  absolute  equivalent  between  shipments  of  manu- 
factured goods  from  Europe  and  shipments  of  a  ^x^duct  such 
as  coflPee  to  Europe^  or  to  assign  any  definite  time  for  the 
letum  shipment 

*When  the  importers  commenced  to  settle  their  indebted- 
ness to  European  creditors  by  remittances  of  money,  an  ar- 
gument in  favor  of  open  credit  was  the  desire  on  the  part  of 
the  debtors  to  remit  when  the  'exchange'  was  favorable.  At 
this  stage  it  may  be  remarked  that  die  currency  reforms  in 
many  escort  markets  have  to  a  great  extent  eliminated  this 
factor. 

Absolute  Confidence 
is  Necessary 

"One  of  the  essential  conditions  of  this  open  credit  trading 
was  absolute  confidence  on  the  part  of  the  exporter  in  the 
importer.  Originally,  the  importing  house  was  the  es^rter's 
own  branch  establishment  Later,  Euxopean  exporters  ex- 
tended these  confidential  relations  to  houses  of  strictly  Eu-  * 
ropean  nationality,  British  or  Germans  located  in  the  export 
field.  Competition  and  the  search  for  wider  markets  forced 
the  European  esqfXMrters  to  penetrate  beyond  the  chain  of  im- 
porters ak»g  the  coasts  and  to  take  up  dealings  with  native 
impcMters.  China,  and  to  some  extent  Japan,  are  the  only 
countries  at  the  present  time  where  every  link  between  the 
exporter  in  Europe  and  the  ultimate  consumer  still  remains — 
the  importer  at  the  foreign  port,  the  jobber,  the  wholesale 
distributor  in  the  intenori  and  the  retail  dealer* 


1C4  EXPORTING  TO  THE  WORLD 


"In  place  of  the  small  group  of  importers  oversea,  many  of 
whom  were  blood  relatives  or  friends  of  the  exporters  and 
whose  financial  standing  was  an  open  bode  to  the  tetter,  the 
exporter  deals  now  with  a  large  number  of  strangers,  whose 
commercial  status  may  be  an  uncertain  quantity.  This  situa- 
tion brings  about  the  creation  of  settlement  by  means  of 
chraf ts.  Each  individual  transaction  is  doctimentsffily  attested 
by  means  of  a  draft;  the  latter  is  accepted  by  the  debtor ;  the 
credit  granted  by  the  exporter  ceases  on  the  day  when  the 
draft  matures. 

Bimif  Nattt  a 
Factor  in  Trade 

"At  this  stage  of  the  development  of  the  export  trade  the 
banks  appear  as  an  important  factor  in  the  credit  business. 
The  bill  of  exchange  becomes  the  foremost  credit  instrument 
of  foreign  trade.  The  improvement  in  the  stability  of  foreign 
exchange  and  the  organization  of  a  network  of  oversea  banks 
were  the  principal  causes  which  contributed  to  thig. 

''The  American  manufacturers  enter  the  export  field  as 
important  competing  factors  at  a  time  when  their  British  and 
German  rivals  and  predecessors  have  begun  to  reap  the  fruits 
of  a  long  period  of  preparation,  organization,  and  adaptation 
to  foreign  conditions.  By  sheer  excellence  of  their  products, 
the  result  of  unparalleled  ingenuity  and  inventiveness,  by  their 
manufacturing  skill  and  remarkable  enterprise,  they  invade 
the  markets  of  the  world  and  attain  a  most  enviable  position 
as  an  exporting  nation.  The  vast  home  market,  indeed,  still 
engrosses  the  attention  of  most  American  manufacturers.  It 
is  comparatively  a  small  number  among  them  who  have 
studied  the  foreign  markets  with  an  eye  to  the  future  as  well 
as  to  the  present  Many  of  them  r^rd  the  export  trade  as 
a  sideline  or  as  an  experiment.  The  results  of  this  phase  in  the 
growth  of  the  American  export  trade  are  numerous  complaints 
from  foreign  customers.  The  farsighted  manufacturers  who 
have  built  up  a  world  trade  are  seldom  objects  of  these  com- 
plaints, but  the  novice  seems  to  be  bound  to  pass  througlr  this 
period  of  apprentkeship,  until  under  the  expensive  tutorship  of 
experience  he  learns  to  transact  his  business  with  the  foreigner 
as  smoothly  as  with  the  home  customer."* 


FOREIGN  CREDITS 


165 


Manufacturers  Refuse 
to  Give  Credit 

Mr.  Wolfe  goes  on  to  cite  the  most  popular  criticism  di- 
rected against  American  manufacturers  by  foreign  buyers— 
that  of  the  refusal  of  the  former  to  grant  credit  to  the  latter. 

"It  may  be  admitted  here  that  the  demand  for  credit  in  the 
export  markets  is  a  vital  one  and  that  European  exporters 
adequately  meet  this  demand,"  says  Mr.  Wolfe.  "The  Ameri- 
can manufacturers,  on  the  other  hand,  have  been  persistently 
blamed  for  ignoring  it.  The  result  of  this  attitude,  it  is 
pointed  out,  is  that  Americans  lose  trade  to  the  nations  which 
will  grant  the  credit  requured  in  the  export  field. 

"'Cash  against  documents'  in  New  York  at  this  period 
comes  to  be  known  as  the  cast-iron  rule  of  many  American 
manufacturers.  Some,  indeed,  have  listened  to  the  reproaches 
of  critics  and  have  shown  a  tendency  to  be  liberal  to  foreign 
customers,  and  as  a  result  have  met  with  financial  losses. 
They  soon  realize  that  while  refusal  to  giant  credit  may  lead 
to  loss  of  trade,  indiscriminate  credit  granting  is  sure  to  lead 
to  loss  of  money."  , 

Credit  Information  Is 

Not  Difficult  to  Obtain 

With  the  growth  of  the  American  export  trade  American 
merchants  ami  manufacturers  have  recognized  the  necessity 
of  accommodating  foreign  buyers  to  some  reasonable  extent  in 
the  matter  of  credit.  With  the  expansion  of  American  banking 
institutions  into  foreign  fidds  and  the  development  of  trade 
associations  and  otficr  competent  agencies  the  facilities  for 
extending  credit  to  foreign  merchants  have  been  bettered 
without  imposing  difficult  burdens  on  those  whol  extend  it. 
A  study  of  a  bank's  functions  in  connection  with  foreign  trade, 
and  metiiods  of  obtaining  credit  informatkm  will  soon  con- 
vince the  beginner  that  doing  bunness  wi^  m  fcmgn  cus- 
tomer is  not  as  difficult  as  it  may  seem. 

The  American  manufacturer  who  sent  a  form  letter  to  a 
foreign  customer  in  which  the  latter  was  asked  to  answer  a 
number  of  queilkNit  ifgarding  his  financial  standing  is  well 


IM  EXPORTING  TO  TU£  WORLD 

known.  Neecfless  to  say,  he  was  not  compeUed  to  wait  rtrf 
long  for  an  answer  in  which  the  foreigner  called  attention  to 
his  impertinence.  An  exactly  opposite  policy  was  adopted  by 
another  manufacturer  who  sent  a  valuable  shipment  of  goods 
to  an  unknown  customer  in  Ai^ftntina  without  firsi  investi- 
gating his  credit  standing.  He  never  obtained  payment  for 
Ins  goods* 

Means  of  Obtaining 
CredU  InforwutHam 

No  shrewd  manufectnrer  will  ship  goods  on  credit  to  a 

foreign  customer  unless  he  has  first  made  a  full  investigation 
regarding  the  merchant's  financial  standing.  Where  can  he 
obtain  tliis  inlormaticMi?  Is  it  jreliable  information?  The 
manufacturer  may  obtain  reports  r^farding  the  financial 
standing  of  a  foreign  prospect  at  home,  or  he  may  obtain 
them  in  the  field  to  which  he  is  asked  to  make  a  shipment. 

The  following  sources  for  obtaining  information  in  the 
domestic  fiekl  are  available  to  the  manufacturer: 

(a)  The  American  mercantile  agencies;  (b)  American 
banks  having  branches  or  correspondents  in  foreign  coun- 
tries; (c)  Export  Trade  publications  in  the  United  States; 
(d)  Foreign  Trade  associations  in  the  Unit^  States;  (e) 
Foreign  exchange  bankers  in  the  United  States;  (I)  Ameri- 
can manufacturers;  (g)  Credit  protectk>n  societies. 

Among  the  fore^  sources  for  obtaining  credit  reports  on 
the  standing  of  customers  are  the  following: 

(a)  Banks  in  the  countries  where  the  proposed  risk  is  in 
business;  (b)  Foreign  mercantile  agencies;  (c)  American 
Chambers  of  Coounerce  in  Fmign  countries;  (d)  American 
manufacturers*  traveling  salesmen  in  foreign  eonntries;  (e) 
Customers'  own  references. 

It  is  possible  now  to  obtain  credit  reports  from  almost 
every  section  of  the  v^orld  where  there  is  business.  The  two 
large  American  mercantile  agencies  years  ago  recognizing  the 
necessity  of  tliis  function  for  American  business  interests,  es- 
taWshed  branches  and  correspondents  in  various  sections  of 
the  world  where  American  business  was  likely  to  penetrate. 
American  Foreign  Trade  associations,  also,  went  into  the 
foreign  field  to  cooperate  with  American  manufacturers  and 


FOREIGN  CREDITS 


167 


exporters.  These  organizations  established  foreign  credit  bu- 
reaus for  the  collection  of  credit  data  which  was  available  to 
all  members.  Other  foreign  trade  associations  recently  or* 
ganized  are  fast  developing  this  department  of  their  activities 
so  that  the  element  of  risk  in  doing  business  with  foreign  mer- 
chants may  be  reduced  as  much  as  possible.  Correspondents 
have  been  sent  to  all  sections  of  the  world  for  the  collection 
of  this  data  in  the  interests  of  the  members  of  the  various 
associations. 

Frocedmrg  im 

Obtaining  Reports 

One  organization  goes  about  the  obtaining  of  credit  reports 
in  this  fashion:  It  organizes  a  corps  of  direct  correspondents 

located  in  nearly  every  city  and  town  of  commercial  import- 
ance in  every  country  in  the  world  outside  of  the  United 
States.  It  endeavors  to  secure  statements  from  firms  in- 
quired about,  and  whta  given,  to  communicate  with  their 
trade  and  bank  references,  at  the  same  time  having  one  or 
more  of  its  own  correspondents  make  independent  investiga- 
tions. Where  firms  refuse  to  give  statements  the  business 
connections  of  the  firm  in  the  United  States  or  Europe  are 
communicated  with.  The  testimony  from  all  sources  is 
sent  to  headquarters  from  where  it  is  sent  to  the  inquirii^ 
manufacturer.  As  the  use  of  the  mails  frequently  means  too 
long  a  delay  it  has  its  own  cable  codes  by  which  the  essential 
information  may  be  secured  by  cable  at  a  minimum  expense. 

American  banks  having  foreign  branches  or  correspondents 
are,  perhaps,  tiie  most  reliable  sources  from  which  credit  in* 
f ormatk>n  may  be  obtained.  It  is  to  their  interest  ti^  com- 
plete reports  on  the  standing  of  customers  in  cities  in  which 
the  American  manufacturer  may  desire  to  do  business,  should 
be  kept.  An  American  merchant  desiring  information  regard- 
ing the  standing  of  a  customer  in  Rio  de  Janiero  should  go 
to  the  Ameriqm  bank  that  has  a  branch  or  correspondent  in 
that  city.  These  banks  wiU  furnish  the  data  if  they  have  it 
on  file  provided  they  believe  the  inquirer  will  make  use  of 
their  service  in  the  financial  transaction  involved.  If  the  in- 
formation is  lacking  on  that  particular  merchant  the  bank 
can  easily  obtain  it  by  cabling.   Unless  tlie  transaction  in- 


168  EXPORTING  TO  THE  WORLD 


volves  a  large  sum  of  money,  however,  this  expensm  pto- 
cedure  is  not  usually  followed.  In  ordinary  cases  a  letter  will 
do  just  as  welL  It  may  require  a  month  or  more  but  not  any 
longer  than  the  time  necessary  to  close  a  transaction  with  an 
overseas  customer. 

Banks  in  foreign  countries  may  be  addressed  direct  and 
generally  an  opinion  is  sent  in  reply  to  the  manufacturer's  in- 
quiry. These  banks  generally  give  brief  information,  and  ad- 
ditional reports  are  often  necessary  to  supplement  the  data 
f4»tained  from  these  sources.  By  piecing  together  all  other  infor- 
mation that  has  been  obtained  from  various  sources  the  manufac- 
turer  should  be  in  a  position  to  intelligenUy  judge  of  the 
customer's  credit  standing. 

The  manufacturer's  credit  man  should  be  a  subscriber  to 
all  competent  and  available  mercantile  agencies.  If  one 
agency  is  unable  to  furnish  the  required  information  perhaps 
the  other  might.  If  the  information  cannot  be  obtained  from 
any  agency  the  bank  might  be  able  to  furnish  it 

The  practice  of  asking  foreign  merchants  to  submit  refer- 
«ices  from  other  fellow  merchants  is  not  generally  the  best 
method.  The  latter  do  not  like  to  be  disturbed,  and  the  former 
ordinarily  do  not  like  to  subject  their  fellowmen  to  such  obli- 
gations. The  manufacturer  should  take  advantage  of  the 
regular  channels— the  banks,  tiie  estabUshed  mercantfle 
agencies,  or  his  own  traveling  salesmen  abroad— for  such 
data. 

Wkai  Is  Necessary  «i 
Credit  Information 

The  foreign  customer  is  always  a  risk,  regardless  of  the 
competence  of  the  credit  reports  that  the  manufacturer  may 
receive  from  the  regular  sources.  Oredit  reports  are  merely 
opimons.  Th^  are  not  authentic  rqxwts  contahimg  a  guar- 
antee that  the  custmner  will  pay  when  required.  Much  de- 
pends on  judgment— judgment  on  the  part  of  the  manufac- 
turer and  his  credit  man.  The  latter  must  Jmow  his  man, 
how  he  shall  proceed  in  doing  busmess  with  b>m,  and  how  &r 
lie  can  trust  him  for  merchandise  obtained  from  the  manu- 
lacturer. 

The  credit  man  must  have  the  following  information  so  that 
he  may  intelligently  arrive  at  a  decision; 


FOREIGN  CREDITS 


169 


(a)  Customer's  general  trade  reputation ;  (b)  The  approxi- 
mate financial  worth  of  the  customer ;  (c)  Whether  he  is  an 
old  established  business  man  or  a  recent  arrival  in  the  field ; 
(d)  His  repuUtion  in  meeting  foreign  drafts ;  (e)  His  reputa- 
tkm  in  meetmg  bills  at  home;  (f)  His  general  character  and 
standing  in  the  community. 

These  are  only  a  few  of  the  points  that  a  credit  Report 
should  cover.  A  good  credit  report  can  never  contain  too  much 
information.  The  experienced  manufacturer  or  exporter  deems 
it  ffgent*^!  to  know  tiie  customer's  reputation  in  meeting  his 
foreign  drafts.  If  his  record  in  this  respect  is  dean  he  is  gen- 
erally considered  to  be  a  good  risk. 

The  credit  man  must  remember  that  the  foreign  credit  re- 
port will  not  be  as  complete  as  that  one  to  which  he  is  ac- 
customed at  home.  Many  of  the  essential  details  familiar  in 
the  domestic  market  such  as  capital,  assets,  debts,  value  of 
merchandise,  etc.,  will  be  missing.  Foreign  merchants  are 
reluctant  to  furnish  this  data.  In  some  countries  they  regard 
the  mere  asking  as  an  insult.  The  Latin  American  or  Chinese 
merchants  object  to  giving  out  reports  of  such  a  personal 
character.  But  the  time  is  coming  when  the  foreign  merchant 
will  recognize  the  necessity  and  value  of  making  his  business 
an  open  book  for  the  perusal  of  American  manufacturers,  just 
as  it  is  done  in  the  domestk  field.  It  must  be  remembered  that 
American  merchants  had  to  be  educated  to  this  metiiod  of 
obtaining  credit  data.  At  first  they  furnished  it  unwillingly, 
but  later  when  they  recognized  its  value  in  their  business  they 
consented  to  give  out  complctr  r^K>rts. 

Credti  Skmdards 

Differ  Abroad 

-\gain  quoting  Mr.  Wolfe:  "Due  to  the  difference  in  trade 
oiganization,  the  credit  man  will  therefore  not  measure  the 
icnreign  rqiort  to  the  standard  of  an  average  American  credit 
report,  either  in  size  or  in  the  quantity  of  definite  data.  No 
one  in  India  or  in  Turkey  or  in  many  other  countries  can  tell 
accurately  what  his  neighbor  is  worth,  and  the  neighbor 
won't  tell.  Some  very  good  foreign  customers  will  as  soon 
divulge  the  combination  of  their  safe  to  a  chance  inquirer 
as  to  state  just  what  ^ey  are  worth,  to  whom  they  owe  for 


i;0  EXPORTING  TO  THE  WORLD 


merchandise,  and  how  much  money  they  have  in  the  bank. 
Therefore,  except  in  commercially  well  developed  countries, 
such  as  Canada,  the  Continent  of  Europe,  and  the  United 
Kingdom,  and  a  few  others,  a  report  will  be  even  more  of  a 
licarsa/  nature  than  at  home« 

•Tin  most  foreign  countries  information  regarding  a  credit 
risk  will  be  the  result  of  inquiry  among  the  rivals  of  the  risk, 
among  houses  supplying  him  with  goods,  among  banks,  whole- 
sale houses,  etc.  For  this  reason  it  is  wise  to  {Mrocure  rqiorts 
from  more  than  one  aouice.  No  one  n^xMter,  no  one  re- 
porting office,  will  always  ascertain  all  of  the  aacertamable 
data  regarding  a  customer.  This  is  not  so  important  when 
the  general  gist  of  the  report  is  in  itself  decisive  for  a  given 
transaction.  A  report  may  read:  *X  and  Co.  are  one  of  the 
oldest  and  most  honorable  houses  on  this  coast  and  have 
been  In  business  for  upward  of  40  years.  Their  wealth  is 
several  hundred  thousand  pounds  sterling.*  This  will  fully 
suffice  to  a  credit  man  considering  the  advisability  of  ship- 
ping X  and  Co.  $300  worth  of  goods.  Pages  of  most  de- 
tailed data  would  not  alter  the  fact  On  the  other  hand,  the 
report  may  read :  *Y  &  Z  are  a  notorious  firm  of  international 
swindlers,  warned  against  frequently  by  consuls  and  others,' 
and  the  matter  is  settled  again. 

'^These  examples,  of  course,  are  esctreme,  but  thcj  tend  to 
show  that  mere  size  is  not  the  decisive  dement  in  a  foreign 
credit  report.  What  decides  is  not  the  number  of  words  or 
details,  but  the  clearness  with  which  the  actual  standing  of  the 
customer  is  portrayed,  enabling  the  credit  man  to  come  to  a 
decision." 

IjMig  Cndks  Af9  Nift 
Nmsmry  m  Esport  Trade 

If  one  is  to  believe  all  the  charges  directed  against  the 
American  manufacturer  in  connection  with  the  granting  of 
reasonable  credit  to  foreign  custonms  one  would  be  tempted 
tn  visualize  Unde  Sam  as  the  "Shylodc"  of  the  export  trade 
field.  "The  American  manufacturer  demands  his  pound  of 
flesh"  is  a  statement  that  is  becoming  very  common  to  our 
ears.  Travelers  arriving  home  from  foreign  countries  bring 
back  stories  to  the  effect  that  American  merchants  are  losing 


FOREIGN  CREDITS 


171 


business  because  of  their  refusal  to  extend  liberal  credit  to 
prospective  customers.    The  newspapers  are  full  of  such 
stories.   Yet  if  these  individuals  who  innocently  bring  back 
these  reporto  would  only  sit  down  and  study  the  methods 
employed  by  other  great  exporting  nations  they  would  readily 
become  convinced  that  this  seemingly  "distasteful"  policy  is 
not  peculiar  to  the  American  manufacturer  alone.  Other 
countries  will  not  grant  credits  indiscriminately,  but  when 
they  do  offer  accommodations  it  is  always  with  the  coopera- 
tion of  banks  engaged  in  financing  foreign  trade,  and  usually 
when  these  foreign  merchants  are  playing  the  role  of  ex- 
porters with  branches  in  other  foreign  countries.    In  direct 
dealmgs  with  foreign  customers,  however,  it  will  Ibe  found 
that  the  German  or  British  manufacturer  is  just  as  reluctant 
in  extending  credit  to  an  unknown  foreign  importer  as  the 
American  manufacturer.   The  latter  cannot  afford  to  tie  up  his 
capital  for  an  unreasonable  length  of  time.    He  does  not  do 
it  if  he  can  help  it   It  is  generally  true  that  credits  of  90 
days  are  considered  satisfactory  in  foreign  trade  but  credits 
over  that  period  are  ex9eptional,  even  among  foreign  inter- 
national traders. 

While  it  is  tr\ie  that  Germany  and  Great  Britain— Germany  in 
particular — are  accustomed  to  extend  the  most  liberal  credit 
terms  to  overseas  customers  it  must  be  remembered  that  this 
practice  has  been-  confined  to  those  countries  in  which  unusu- 
ally longer  credits  are  required  than  in  other  sections  of  the 
world.  For  instance,  trade  between  Germany  and  the  United 
States  has  generally  been  on  a  cash  or  short  term  credit  basis. 
The  reason  for  this  is  obvious.  These  two  countries  are 
highly  developed,  and  actual  payment  for  merchandise  does 
not  depend  so  much  on  transitory  conditions.  In  dealing  with 
countries  whose  point  of  development  is  still  below  a  satis- 
foctory  margm,  however,  it  is  quite  necessary  to  be  more  le- 
nient m  the  matter  of  payments. 

German  exporters  have  taken  these  factors  into  considera- 
tion, and  consequently  we  find  in  many  cases  that  extremely 
liberal  credits  have  been  granted  to  customers  in  certain  quar- 
ters of  the  globe  such  as  Latin  America,  certain  parts  of  Africa 
and  the  East  Indies. 

The  customary  length  of  German  drafts  on  over-seas  coun- 
tries before  the  war  was  as  follows : 


178 


EXPORTING  TO  THE  WORLD 


South  America:  3.  4,  6,  9,  and  12f  months;  most  frequency  3 
to  6  months. 

Central  America :  and  West  Indies :  4,  6,  and  9  months. 
Australia:  30,  GO,  90  and  120  days. 

China  and  Japan :  Mostly  3  months;  also  8, 4,  and  6  months. 

Dutch  East  Indies  and  Straits  Setaements:  30,  60,  90,  and 
120  days,  np  to  6  months. 

British  India  30,  60,  90,  and  120  days. 

South  Africa :  60,  90  and  120  days,  up  to  6  months. 

Northern  Africa  and  Asia  Minor:  4  to  9  months. 

It  win  he  noted  that  length  of  credit  varies  with  the  character 
of  the  territory  in  which  the  importer  may  be  doing  business.^ 
Even  now,  however,  as  is  mentioned  elsewhere  in  this  chapter, 
there  is  a  general  movement  in  aU  quarters  for  the  elimhiation 
of  this  long  credit  evil.  In  Germany  protests  have  frequently 
been  made  against  a  too  liberal  policy  in  this  respect.  British 
exporters  are  frowning  on  the  idea.  The  general  thought  seems 
to  be  that  the  customers  who  are  constantly  askmg  for  time 
arc  those  who  may  be  less  desirable  on  the  books  of  the  export 
merchants.  It  is  doubtful  whether  this  loose  policy  will  be 
renewed  unless  competition  becomes  so  strong  among  the 
nations  that  they  will  agam  become  reckless  in  making  special 

1 -XStMfrflF  Ewopera  homn  aOow  cnm  of  at  least  six  months.    If  Colom. 
-«i  mercnants  c«uo  obtain  tbe  ttaM  tanna  iraa  tha  Uaitad  Stataa  this  would 

be  an  important  factor  in  increasingr  the  business  betweaa  tha  two  nminiiiin.  It 
l^Tt^'-l'^t  United  States  merchant  cannot  ftaat  aa«er  terms  it  would 
.      ^1   ^^"^'^^  ^^^^  necessary  facilities  in  the 

TermA^^    r  ^  ^  coUecting  should  grant  easy 

terms,  because  m  Colombui  payments  are  not  mmSty  voy  pnetinl*  tUa  doaa  oot 
mean  that  the  acceptance  of  the  draft  is  not  good,  but  there  is  considerabk  lat- 
itnde  m  Colombia  m  the  matter  of  paying  drafts.  The  intermediaries  do  not  care 
to  asmne  te^Nmaibimy  nor  to  take  the  trouble  to  protect  the  drafts,  as  the  pro- 
cedure  is  not  so  rapid  or  eamnient  as  in  oChar  ooomrica.  Mottmr  as  the  ma- 
jcnty  of  the  drafts  that  reach  Colombia  from  manufactwara  ar«  — .^n  ^  bBaW 
jvho  collects  has  more  work  than  a  baakar  in  aaothar  ooHrtry  aad  liaa  to  A«  a 
hi^ar  coouaission.  ^ 

_  hiVortatiooa  iaio  Bogota  ara  on  a  ciodit  basis,  through  the 

medium  of  commission  houses  who  diaw  on        roiluiaiii  at  ISO  or  160  dawL 

American  manufacturers,  with  some  exceptiooa,  do  Mt  coro  fer  tUa  Uod  of 
business  and  usually  demand  payment  against  shipping  documents  in  New  York 
i-'^j'fT^  acceptable  to  the  merchants  of  Colombia.  The  latter  are 
teqM  to  plaae  ^  mmt^  !•  Haw  York  at  tfw  tioie  they  order,  and  manufac- 
turers  some  times  dalaj  mootha  in  mm  tha  oitea  wilk  tka  loMIt  that  tha  mJ^r 
k»ses  interest  in  Colombia,  where  rates  are  high. 

"Of  late  large  interests  in  Manchester  England,  have  been  cutting  down  tfM 
tine  gfaotcd  oo  Colombia  by  giving  only  four  months  instead  of  six 

months  and  upward.--B«aa«  of  Fofoipi  aai  DooMstk  Conaaioa  Special  AgenM 


FOREIGN  CREDITS 


173 


offers  of  credit  to  prospective  customers  in  order  to  get  their 

business. 

The  Necessity  of  CredU 
To -ike  Foreign  Buyer 

The  problem  of  credit  will  always  command  the  most  serious 
attention  of  tiie  exporter  because  of  the  varied  factors  involving 
transactions  of  this  character  in  dealings  with  foreign  buyers. 

As  Mr.  W.  E.  Tarlton,  export  manager,  Brown  Shoe  Co.,  said 
at  the  Fifth  National  Foreign  Trade  Convention: 

"I  feel  that  we  are  all  agreed  that  credit  has  been  on'^  of  the 
fundamental  necessities  in  the  development  of  our  present,  almost 
perfect  commercial  structure,  and  if  it  has  been  necessary  in 
order  to  mature  the  commercial  life  of  any  nation,  it  is  equally 
necessary  to  produce  like  results  in  all  nations.  Some  of  the 
countries  that  represent  today  the  most  lucrative  field  for  Ameri- 
can products  have  an  insufficient  home  capital  for  the  needs  of 
^leir  k^cal  commercial  interests  and  the  simultaneous  develop- 
ment of  their  own  natural  resources.  Merchants  m  such  coun- 
tries are  compelled  to  play  a  most  important  part.  They  are  of 
necessity  forced  to  place  goods  with  the  consumer  on  credit,  due 
to  the  fact  that  returns  yielded  on  invested  capital  from  agricul- 
tural enterprises  (which,  of  course,  go  to  make  up  the  principal 
industries  of  these  less  devdoped  countries),  while  liberal,  do 
not  occur  at  sufficiently  rapidly  recurring  intervals  to  permit 
cash  transactions.  These  same  merchants  or  importers  are  also 
called  upon  to  advance  heavily  for  freight,  duty,  landing  charges, 
and  etc.,  and  unless  credit  is  extended,  they  are  not  in  a  position 
to  buy  f  leely.  In  sparsely  settled  countries  these  same  mercliants 
in  many  instances,  are  also  baiikers  and  as  such  are  hampored  at 
certain  seasons  of  the  year  for  ready  cash.  The  long  dday  in 
securing  imported  merchandise  due  to  transportation  difficulties, 
manufacturing  delays,  etc.,  necessitate  the  importer  in  these 
countries  carrying  larger  stocks  than  would  be  necessary  were 
suppfies  available  in  shorter  time; 

Lack  of  Stability  m 
Exchange  a  Paetar 

"Another  unfailing  argument  in  favor  of  credit  in  some  nations 
is  the  lack  of  stability  in  exchange  rates.  The  seasonable  exchange 
fluctuations  in  some  of  our  Central  and  South  American  countries 
are  to  be  seriously  redDoned  with  and  are  a  constant  source  of 


174  EXPORTING  TO  THE  WORLD 


innoyance.  I  eaniestly  look  forward,  however,  to  the  day  when 
some  master  intellect  among  our  banking  friends  will  offer  a 
satisfactory  solution  to  this  ever-perplexing  problem. 

"Competition  is  also  a  much  used,  possibly  abused  excuse,  espe- 
pedally  in  the  moitths  of  leaders  of  industries  new  m  the  practice 
of  exportuig,  and  is  quoted  freely  gfi  a  cause  for  the  extension  of 
credit  in  foreign  countries. 

"Credit  is  and  always  has  been  an  absolute  necessity.  Remove 
the  principle  of  credit  from  our  daily  conunerce  and  you  leave 
ooty  a  trifle  over  $10,000,000,000  of  protected  currency  or  cash 
in  the  coffers  of  the  world,  and  as  daily  transactions  between 
buyer  and  seller  represent  a  volume  hardly  measurable  in  the 
terms  of  dollars  and  cents,  you  can  quickly  appreciate  that 
business  wouki  be  so  materially  curtailed  as  to  completely 
nullify  Ac  commercial  efforts  of  the  past  hundred  years  or  more. 
The  safe,  sane  credit  systems  and  practices  now  prevalent  make 
possible  the  magnitude  of  the  world  commerce  which  we  now 
enjoy, 

CmuUmtHams  m  IA# 
Formation  of  Credit  Policy 

"I  have  always  liked  to  feel  that  there  was  a  certain  obligation 
on  the  part  of  the  business  houses  to  take  their  place  in  the  game 
as  a  wbttkt  hy  extendmg  credit  to  an  amount  commensurate  with 
the  vohmie  they  were  enjoying  and  the  returns  or  profit  tiicy 
aedc* 

"Manufacturers  anticipating  a  permanent  export  business  must, 
of  course,  in  the  fulness  of  time,  decide  upon  some  definite 
policy  r^^arding  the  subject  of  credits.  As  a  rule  there  are 
three  points  to  cmisider: 

"(a)  Your  product,  and  if  perchance,  you  are  producing  such 
goods  as  are  non-competitive  you  are  fortunate  indeed,  for  in 
that  case  you  can  of  course,  insist  upon  such  terms  and  prices 
as  you  want'  If,  however  you  are  producing  articles  that  are 
subject  to  competition  you  will  find  yourself  face  to  face  with 
the  problem  of  doii^  as  the  Romans  do. 

"(b)  You  must  consider  your  market  and  the  requirements 
thereof  as  to  credit.  The  various  markets  of  the  world  have 
established  rules,  some  of  which  have  been  in  existence  for 
many  genetations,  and  these  people  will  be  sbw  to  change  Iran 


FOREIGN  CREDITS 


175 


these  rules  simply  as  an  accommodation,  as  they  put  it,  to  Ameri- 
can inflexibility. 

"(c)  Your  buyer  must  be  reckoned  with,  and  he  will,  of  course, 
consider  cash  transactions  only  as  a  last  resort.  His  hrst  thought 
is  whether  he  is  in  a  poutioa  to  pay  in  advance  or  whether  his 
means  are  such  that  he  must  have  credit.  No  truer  remark  has 
ever  been  made  on  this  subject  than  was  made  by  an  exporter 
before  this  convention  in  New  Orleans  in  1915,  who  said:  'The 
question  of  credit  is  one  of  the  difficulties  with  which  exporters 
have  to  deal,  but  if  yoU  want  to  export  at  all  your  credits  must 
be  handled  in  the  same  intelligent  way  and  along  lines  not  funda- 
mentally dissimilar  to  those  employed  in  dealing  with  our 
domestic  trade.' 

"American  exporters  have  been  harangued  by  writers  of  vari-^ 
ous  creeds  and  tongues,  even  American  writers,  for  their  frigidity 
of  terms,  and  in  contradistinction  thereto  mention  has  been  made 
of  the  liberally  of  Germany.  We,  of  course,  have  today  our 
ideas  as  to  the  extent  of  Germany's  liberalities.   England  and 
other  exporting  countries  have  been  extolled  and  their  praises 
sung.  We  have  been  told  of  their  philanthropy  of  their  enter- 
prise, of  their  investments  made  ior  pioneering  enterprises  with 
lo  desire  for  return  except  as  a  benefit  to  their  country  as  a 
whole,  but  all  of  this  is  quite  misleading.   True  enough,  in  your 
experience  as  exporters,  you  will  find  that  m  many  instances  long 
terms  have  been  granted  and  liberal  terms  ext^ided  by  manufac- 
turers in  these  various  countries,  but  analysis  of  the  situation  will 
invariably  show  that  these  long  terms  and  liberal  credits  have  been 
extended  only  after  careful  investigation  and  after  applying  the 
same  general  rules  that  should  always  govern  the  extension  of 
credit  of  any  character.    Even  our  so-called  'American'  cash 
terms  are  quite  freely  indulged  in  by  our  competitors  in  inter- 
national trade,  and  more  often  than  otherwise  are  demanded  by 
them.  Conservatism  pervades  the  niind  of  every  intelligent  credit 
grantor,  whether  he  learns  it  from  an  American  business  primer 
or  from  an  English,  French  or  Dutch.  The  short  terms  principle 
which,  I  admit,  is  desirable  by  every  American  manufacturer,  is 
fundamentally  somid,  ideal  and,  in  fact  envli^  and  the  time  is 
ripe  for  a  forceful  attitude  toward  short  terms,  especially  in  lines 
of  quick  turnover  possibilities  and  commodities. 


m  EXPORTING  TO  THE  WORLD 


Americans  Future 
Credit  Policy 

"Up  to  the  present  tune  it  has  not  heen  expedient  nor  neees- 
saiy  that  we  shotdd  place  onr  goods  In  foreign  fields  on  long 

terms  or  under  a  system  of  loose  credit.  In  fact,  it  has  not 
been  necessary  that  we  sell  our  goods  to  foreign  countries  at  all 
except  where  it  could  be  done  on  an  extremely  profitable  basis, 
and  kmg  terms  and  profit  are  not  compatible  onkss  they  are 
accompanied  by  a  mediator — ^long  prices.  Implicit  faith  iir 
American  business  capacity  and  ingenuity  prompts  me  to  feel 

overcome  any  and  all  con^tition,  how- 
ever, when  once  we  have  f oond  k  necessary  to  do  so.  The 
manufacturing  capacity  of  the  United  States  has  heretofore  just 
about  equalled  our  demand,  but,  of  course,  we  are  beginning  to 
realize  that  there  will  be  surplus  production  so  soon  as  the  high 
peak  load  toward  which  we  have  heen  so  fast  climbing  is  reached. 

"That  we,  as  exporters  are  willing  to  grant  credit  is  an  irre- 
futable fact  One  hundred  and  forty-one  representative  firms 
were  asked  the  question,  'Are  you  granting  credit  to  concerns 
located  in  countries  other  than  our  own  V  One  hundred  and  ten 
replied  affirmatively,  thirty-one  only  were  insisting  on  cash  in 
every  instance.  Our  American  firms  are  as  able  to  extend  credit 
or  better  able,  in  fact,  tiian  any  competitor  we  have.  We  have 
the  financial  strength,  and  when  the  propitious  moment  arrives 
and  a  reasonably  substantial  basis  for  credit  can  be  shown,  we  are 
perfectly  ready  to  extend  the  necessary  credit.  Importers  of  our 
goods,  however,  must  know  or  he  tanght,  if  they  do  not  know, 
that  merchandise  on  credit  costs  mm;  tint  short  terms  are  eoo- 
nonucal,  sound,  s^d  safe;  ^t  Vm^  terms  and  the  pernicious 
abuses  of  cre^  which  have  been  so  prevalent  in  some  countries 
should  be  wiped  out  at  this  the  most  opportune  time  of  all  history. 

*'Up  to  this  time  I  have  not  attempted  to  differentiate  between 
the  term  'open  credit'  and  'time  a€CQ>tances.*  Both  are  credit,  one. 
extrcmdy  hazardous,  the  odier  considerably  less  ttlMHre  are,  of 
course,  sound,  honorable  business  men  in  every  civilized  country 
in  the  world,  and  I  for  one,  deeply  appreciate  the  truth  of  this; 
but  these  qualities  are  most  loudly  extolled  by  those  whose  ckise, 
first-hand  knowledge  and  cxperieiice  are  not  wprtiaefUtd  by  maiiy 
years  of  actual,  open-credit  rdatkmship  widi  merdants  in  for- 
eign countries,  and  I  mean  it  as  no  reflection  upon  these  mer- 


FOREIGN  CREDITS  m 

chants  when  I  warn  against  open  credits.  It  is  a  policy  only  to 

be  dealt  with  with  eyes  wide  open  and  after  a  thoroughly  com- 
prehensive and  efficient  investigation  and  a  compilation  of  com- 
plete, satisfactory  data. 
''Open  credit  is  based  solely  upon  confidence.  Confidence  is 

the  result  of  one*s  own  or  someone  else's  experience  and  should 
only  be  dealt  in  when  one  is  familiar  with  the  details  of  such 

''There  will  come  times,  in  die  experience  of  every  eiqxurter 

who  does  any  volume  of  business  to  speak  of,  when  he  must  ex- 
tend open  credit  or  lose  profitable  business,  and  in  many  cases, 
under  any  and  all  sorts  of  circtanstances,  and  in  most  any 
country,  some  open  credit  can  be  extended  with  no  more  attend- 
ing dangers  than  is  average  with  any  well  organized  house, 
even  though  dealing  exclusively  with  domestic  trade. 

"Summarizing,  I  have  attempted  to  show  what  credit  is— to 
show  also  diat  it  is  vitally  essential  to  the  development  of  big 
bushiess,  either  dooMStic  or  taagoti;  to  show  tiiat  manufacturers 
must  decide  upon  their  credit  policy;  that  as  a  Nation  wte  are 
willing  to  extend  credit  and  are  financially  able  to  do  so;  that 
we  should  not  extend  long  terms,  but  that  we  should  apply  to 
the  extension  of  credit  to  merchants  in  foreign  lands  the  same 
intelligent  rules  that  have  built  up  the  fabric  of  commercial 
cre^t  m  our  own  country.  We  need  badly  f urther^help  from  our 
enormously  large  financial  institutions.  They,  at  least  some  of 
them,  have  had  the  vision  and  are  bending  every  effort  toward 
promoting  the  interests  of  American  exporters.  We  need  also 
serious  study  on  the  part  of  om-  l^slatures  toward  expansion  of 
f  ordgn  trade  interest,  hut,  greater  tiian  all  these  is  the  need  that 
the  mist  of  mdiffei^ence  and  busmess  I4»tiiy  be  removed  from  the 
eyes  of  our  manufacturers  that  they  may  not  only  see  the  benefits 
that  will  accrue  to  thiem  as  individuals  by  closer  study  of  this 
vital  issue,  world  commerce,  but  that  they  may  consider  it  a  duty 
to  interject  their  energies  into  it  so  that  a  nation  may  become  a 
real  &ctor.  It  is  not  enough  that  we  buy  and  sell  to  one  another, 
we  must  likewise  buy  from  and  sdl  to  other  countries,  as  only 
by  so  doing  can  we  contribute  to  the  economic  growth  and  ex- 
pansion of  the  United  States.  The  time  is  ripe,  American  goods 
are  favoraUy  known  in  every  quarter  of  the  globe.  With  the 
^.ftffttttm  of  hostilities  in  Europe  and  the  assurance  of  open  seas 
and  world  iMt  denmrnqr*  ^     Amercan  merdumt  nnnne 


in  EXPORTING  TO  THE  WORLD 

commensurate  with  the  standing  of  our  country  opportunities 
will  be  far  in  excess  of  any  we  have  previously  had." 

Mwment  to  Discouragi 
Vu  af  Lomg  CfwdUs 

With  changed  conditiona  brought  about  by  the  end  of  the 
war,  and  the  world  settling  itsdl  down  on  a  more  substantial 
basis  there  has  grown  a  movement  in  which  bankers,  and  ex- 
porters, and  importers  alike  from  all  parts  of  the  world  are  shar- 
ing a  part  to  discontinue  the  economically  unsound  policy 
of  extending  unreasonable  credits.  Buyers  who  have 
been  accustomed  to  obtaining  the  most  favorable  terms  tram 
manufacturers  and  exporters  are  already  beginning  to  rec- 
ognize the  advantages  of  doing  business  on  a  cash  or  short  term 
basis.  Purchases  under  such  conditions  usually  mean  lower 
frkes  and  better  discounts.  Reliable  reports  to  the  effect  that 
large  nundiers  of  buyers  may  be  found  in  the  principal  ports  of 
the  United  States  with  ready  cash  for  purchases  of  American 
goods  for  their  foreign  clients  seem  to  indicate  that  a  step  is 
being  taken  in  this  direction.  With  the  development  of  the 
machineiy  of  financing  foreign  business,  however,  the  American 
manufacturer  can  kxik  txpm  the  business  of  developing  trade  in 
foreign  countries  on  reasonable  credit  as  invohring  as  Uttle  risk 
as  at  home. 

EspaH  CretKi 

Insurance  Plan. 

As  the  necessity  of  obtaining  rdiahle  credit  information  from 

foreign  countries  is  increasing  with  the  tremendous  growtii  of 
our  trade  there  have  been  advanced  within  recent  years  various 
pWte  aimed  to  solve  the  problems  of  credit  managers  in  connec- 
tion with  foreign  business. 

I^haps,  the  most  substantial  plan  is  Aat  whtdi  has  been  re- 
cently developed  in  Great  Britain.  This  plan  invohres  the  insure 
ing  of  the  payment  of  bills  in  export  transactions. 

There  are  two  export  insurance  schemes  in  operation  in  Great 
Britain:  (a)  the  British  Government  Export  Credit  Insurance, 
whidi  is  carried  on  under  a  department  of  the  Board  of  Trade 
known  as  the  Exports  Credit  Department,  and  (b)  a  second 
scheme  consists  of  two  private  companies,  the  British  Trade  C3oP- 
pofatkm  and  the  Trade  Indemnity  Ca 


FOREIGN  CREDITS 


179 


Under  the  plan  of  the  British  Government  Export  Credit  In- 
surance the  seller  of  British  merdhandise  to  merchants  in  the 
new  States  receives  immediately  a  certain  portion  of  his  btil, 
even  up  to  80  per  cent.  The  whole  transaction  is  carried  on 
directly  with  tliis  branch  of  the  Board  of  Trade,  which  has  ar- 
ranged witii  the  banltt  of  the  United  Kingdom,  through  their 
head  offices  in  London,  to  scrutinize  the  shipping  documents  and 
report  in  a  note  as  to  the  reputation  of  the  buyer  as  well  as  the 
seller,  so  far  as  can  be  ascertained.  The  buyer  is  not  given  open 
credit,  but  nmst  pay  for  tiie  goods  in  the  mon^r  of  his  country 
at  the  rate  of  the  pound  steriing  exchange  before  the  goods  are 
delivered  to  him.  The  banks  in  the  United  Kingdom  do  not 
handle  any  of  the  funds,  the  whole  transaction  being  carried 
on  in  the  foreign  country  through  the  branches  of  the  Govern- 
ment department,  the  banks  acting  only  as  information  bureaus. 

The  object  underlying  the  project  is  to  help  these  new  States 
organize  their  foreign  trade  and  at  the  same  time  to  build  up  a 
sound  British  business  with  these  countries.  The  requirement 
that  the  goods  be  paid  for  in  the  money  of  the  country  of  pur- 
chase will,  to  a  large  extent,  eliminate  losses  and  will  build  up 
a  trade  with  only  st^  firms  as  have  substantial  financial  backing. 

Terms  Upon  Which 
Jnsmrmee  is  gkfm 

The  British  Government  is  prepared  to  consider  applications 
for  advances  up  to  80  per  cent  of  the  cost  of  the  goods,  plus 
freight  and  insurance,  for  goods  wM  to 

Finland : 

The  Baltic  Provinces  (Latvia,  Esthonia,  and  Lithuania) ; 
Poland; 

Czechoslovakia: 

Jugo-Slava;  and 

The  areas  in  Russia  to  which  the  scheme  for  insurance 
against  abnormal  commercial  risks  applies; 
subject  to  the  foUowing  conditions: 

1.  Docmnentt  are  to  he  surrendered  to  the  buyers  against 
their  acceptance  of  a  bill  hi  sterlmg  drawn  1^  tiie  sdlers  for  the 
full  amount  of  the  invoices,  together  with  security  (sec  next 
paragraph).  The  Government  will  release  the  drawers  from  any 
recourse  against  them  for  the  amount  of  the  advances  made. 


180  EXPORTING  TO  THE  WORLD 


2.  The  purchasers  must  agree  to  take  up  such  documents 
against  a  deposit  of  currency  calculated  on  the  basis  of  the 
mafkiet  exdianges,  such  deposit  to  be  made  with  an  approved 
bank  in  the  country  of  purchase  and  to  be  hdd  as  security  for 
the  due  payment  of  the  bills. 

3w  When  the  advance  is  needed,  the  relative  documents  will 
have  Id  be  accooqpaiued  by  a  letter  of  guaranty  from  an  apptoved 
bank  of  the  country  of  purchase,  stating  that  tiie  documents  will 
be  promptly  taken  up  against  such  deposit  of  currency  and  under- 
taking that  the  amount  of  such  currency  shall  always  be  main- 
tained at  a  figure  snfficicnt  to  give  a  margin  of  16  per  cent 
over  die  value  of  steriing  as  based  vtpoa  tiie  exchanges  (not 
upon  the  official  exdianges,  if  any).  All  applications  accom- 
panied by  a  bankers'  guaranty  of  sterling  payment  at  maturity 
of  the  bill  will  receive  preferential  ctmsideralion. 

4  The  department  will  con^der  proposab  for  a  di^odt  of 
produce  or  securities  instead  of  currency. 

5.  The  advances  made  by  the  department  will  be  a  first 
charge  upon  the  proceeds  of  the  bills  and  securities;  but»  il 
sudi  proceeds  are  less  than  the  cost,  phis  freight  and  insurance, 
the  loss  represented  by  the  difference  will  be  divided  between 
the  department  and  the  drawer  of  the  bill  in  the  proportion  of 
the  advance  made  to  the  cost  (plus  freight  and  insurance). 

6b  The  credits  are  to  ontstand  only  for  such  periods  as  the 
department  may  determine  in  each  case  at  the  ttai  of  applica- 
tion for  the  advances. 

7.  The  Government  will  settle  from  time  to  time  the  countries 
and  goods  to  which  the  sdieme  rdates,  hot  advances  will  not 
be  made  for  the  export  of  raw  materials  and  preferences  wiU 
be  given  to  the  finance  of  goods  where  the  larger  part  of  the 
cost  is  due  to  manufacture  in  this  country. 

8.  All  applications  must  be  passed  to  the  department  by  the 
bankers  of  the  sdkrs,  whose  recommendation  must  be  attached. 

9.  After  satisfaction  of  the  advance  the  bin  and  secnritiei 
will  be  handed  to  the  seller  if  payment  of  the  full  amount  of  the 
bill  has  not  been  made. 

10.  At  any  time  after  maturity  of  the  bUl  or  after  any  default 
die  dqwrtment  will  be  entitled  to  ckise  a  transaction  and  hud 
over  the  security  held,  die  seller  bearing  his  prqxMtion,  as  in- 
dicated above,  of  any  loss  incurred. 


FOREIGN  CREDITS 


11.   The  conditions  set  out  above  may  be  modified  at  any 
time  in  special  cases. 

The  BriHsh  Trade 
CorporaHan's  Pkms 

The  British  Trade  Corporation,  on  the  other  hand,  has  formed 
a  subsidiary  company  which  may  possiUy  devekip  into  an  under- 
taking of  importance  to  British  commerce  aU  over  the  world. 
The  new  undertaking  is  called  the  Trade  Indemnity  Co.,  and  its 
subscribed  capital,  which  is  entirely  owned  by  the  corporation,  is 
100,000  pounds,  of  which  20,000  pounds  has  been  paid  up. 

"The  object  of  the  new  company  is  to  assist  British  merchants 
and  manufacturers  in  developing  overseas  busmess,  by  insurance," 
it  is  explained  by  a  London  firm  to  an  American  consul.  "Pofides 
are  issued  insuring  the  payment  of  commercial  debts,  thus  en- 
abfing  an  exporter  to  increase  his  present  volume  of  trade  with- 
out mcurring  greater  capital  responribiUties.  Under  approved 
conditions  the  company  will  advance  to  die  assured  the  amount 
of  its  liability  in  respect  of  any  debt  insured,  against  transfer 
of  the  debt,  and  payment  of  interest  on  the  amount  advanced, 
until  the  net  outcome  of  an  estate  is  ascertained.  The  company 
granto  policies  insuring  up  to  two-thirds  of  a  client's  whole 
turnover  against  ultimate  loss.  Policies  are  also  granted  to  cover 
a  proportion  of  such  losses  as  may  arise  shooMatoced  rewk 
of  goods  become  necessary  in  consequence  of  buyers  becomuig 
msdvent  and  thereby  unable  to  take  up  shipping  documents. 
The  company  likewise  grants  policies  insuring  against  a  propor- 
tion of  tiader's  losses  in  any  one  year  in  excess  of  an  agreed 
percentage  of  loss  on  turnover  to  be  home  by  the  aasnred.  The 
company  is  also  prepared  to  grant  polideft  insoring  approved 
accounts  up  to  three-fourths  of  the  amount  of  a  ddit 

"These  last-named  policies,  insuring  specific  accounts  will  be 
issued  on  diree  iMffeient  bases.  Under  policies  issued  under 
basis  A  die  company  wiU  piqr  to  die  assured  an  agreed 
proportion  of  die  net  loss  after  die  dd>tor  has  become 
insolvent  and  all  dividends  recovered  or  asccrtahied. 
Under  basis  B  the  assured  will  receive  within  seven 
days  after  satisfactory  proof  of  insolvency  a  sum  equal 
to  18.  4d.  ki  die  pound  [$8.24  m  each  $4.87]  on  the 
proportion  of  the  debt  hisured  wider  Ae  po»cy.  in  fnU  wtisfac- 
tion  of  the  liability  of  the  company ;  but  die  assured,  besides  re- 


m  EXPORTING  TO  THE  WORLD 


cchriog  this  certaui  payment,  will  be  entitled  to  any  dividends 
that  may  be  for^icoming.  Under  basis  C  the  company  will  under- 
take to  pay  to  the  assured,  in  the  event  of  the  dishonor  of  any 
duly  accepted  bill,  an  agreed  proportion  of  such  bill  as  is  covereil 
by  the  poliqr  within  a  lew  days  of  satisfactory  pcoof  of  such 
dishonor  and  asngnment  of  the  dd>t  to  the  company.  Any 
amoont  collected  by  the  company  from  the  estate  of  the  defaulter 
in  excess  of  the  amount  paid  by  the  company,  plus  interest  and 
charges,  will  be  returned  to  the  assured. 

Development  Has 
Taken  Many  Yemrs 

"Hie  development  of  a  baas  on  which  to  estabKsh  a  system  of 
insuring  trade  credits  has  taken  many  years.  For  perhaps  a 
century  or  more  the  principles  of  insurance  on  a  mutual  basis 
were  carried  out  in  the  form  of  sharing  or  pooling  credits. 
Tills  was  confined  to  one  or  two  trades  where  it  was  deemed 
necessary  for  self-protection  for  a  number  of  merdiants  to  par- 
ticipate in  some  commercial  venture  in  which  the  magnitude  or 
the  dangers  were  more  than  usual,  but  where  the  prospect  of 
profits  was  also  of  a  nature  to  encourage  the  merchant's  taking 
the  extra  hazard. 

''Between  twenty  and  thirty  years  ago  several  institutio  ns  pfo- 
aioted  schemes  for  guaranteeing  the  payment  of  bills  of  ex- 
change, but  made  no  discrimina^on  between  trade  and  accommo- 
dation paper.  No  definite  system,  however,  matured  from  these 
eflForts,  and  with  one  or  two  exceptions  the  insurance  and  trust 
companies  stopped  this  class  of  business  entirdy.  In  America  a 
certain  amount  of  success  followed  a  scheme  based  on  die  'cradit 
ratings'  of  Dun  and  Bradstrect,  but  these  ratings  books  were 
apt  to  put  a  material  limitation  on  the  granting  of  credit  and 
if  anything  tended  to  a  restriction  of  trade. 

"The  Germans  had  a  somewhat  similar  system,  based  on  a  Gov- 
effnment  information  bureau.  It  was,  however,  too  conqilicated 
to  encourage  its  general  use,  and  very  few  availed  tfaemsehres  of 
the  scheme,  except  as  regards  the  export  trade— in  which,  previ- 
ous to  1914,  it  was  being  taken  up  and  encouraged  by  the  banking 
houses.  In  Germany,  however,  the  bankers'  readiness  to  discount 
bills  of  eacdiange  wiAout  recourse  to  tiie  drawer  was  largely 
iloii^  away  wiA  tiie  necessity  of  guaranteeing  payment  of  credits. 
This  accommodation  to  the  merchant  was  of  great  service,  as  the 


FOREIGN  CREDITS 


183 


seller  was  relieved  of  his  Bability,  and  his  transactions  were 
brought  to  a  cash  basis,  thus  enabling  him  to  increase  his  turn- 
over on  a  mudi  smaller  capital  than  would  otherwise  have  been 
possible.  In  England  also  it  was  possible  to  discount  trade  bills, 
but  this  venture  was  and  still  is  in  the  hands  of  foreign  bankers. 

"The  discounting  of  insurance  of  bills  of  exchange  was  found 
quite  faadfqMatf^  to  meet  the  requiremoits  of  the  merchant  and 
manufacturer.  By  far  the  greater  number  of  cre^t  transactions 
were  effected  without  the  use  of  bills  of  exchange,  being  simply 
the  aUowing  by  the  seller  of  an  open  account  to  the  buyer.  A 
syndicate  of  Loyd's  underwriters  formulated  a  policy  to  cover 
this  class  of  risk.  It  was  recognized  that  with  bills  of  exchange 
a  definite  "proof  of  debt"  existed,  but  with  open-account  trans- 
actkms  certaui  difficulties  presented  themselves.  These  were 
overcome  by  granting  a  somewhat  lenieni  form  of  poliqr  and 
trusting  to  the  good  faith  of  the  assured. 

*'The  demand  for  credit  insurance,with  the  comparatively  simple 
forms,  adopted  by  the  underwriters,  grew  very  rapidly.  The 
merchant  immediately  recognized  its  utility,  and  althoi^  the 
business  was  conducted  without  any  of  the  usual  methods  of 
publicity  it  became  of  great  service  to  both  the  home  and  the 
foreign  trader.  It  was  obvious  to  Acm  that  they  could  extend 
their  trade  without  increasing  their  capital  It  gave  the  merchant 
greater  confidence  in  entering  foreign  markets  with  which  he 
was  tinarqwatnt^id,  and  in  many  instances  he  was  enabled  to  build 
up  a  trade  that  would  otiierwise  have  been  impossible  without 
material  help  from  his  banker  at  a  cost  (represented  by  a  fwc- 
mium  paid)  much  less  than  that  necessary  for  actual  bankers* 
Hffffifft^nr^  A  cautious  merchant  also  benefited  by  being  enabled 
to  grant  larger  credits  without  disturbing  his  ideas  as  to  the 
limitation  of  individual  credits  and,  as  more  tiian  one  merchant 
observed,  "without  forfeiting  a  night's  rest"  by  jeopardizing 
his  own  financiai  resources. 

This  system  of  insurance  also  greatly  facilitates  tiie  opening  of 
new  accounts,  both  home  and  foreign.  The  independent  sources 
of  information  possessed  by  the  insuring  company,  added  to  re- 
ports obtained  by  the  seller,  invariably  tends  to  strengthen  the 
confidence  necessary  for  the  conducting  of  commercial  inter- 
course between  buyer  and  seller. 


184 


EXPORTING  TO  THE  WORLD 


Premiums  determined 
By  Naime  of  Risk 

"Many  methods  of  ummng  credits  liive  been  tried,  and  the 
conditions  of  Iht  pcJicies  granted  have  varied  materially.  The 
insurance  of  specific  accounts  is  perhaps  the  most  useful  and 
most  generally  adopted  at  the  present  time.  Under  this  form  of 
policy  the  applicant  must  submit  the  names  of  the  customers 
whose  accounts  he  desires  to  cover,  and  furnish  the  insurance 
amaptaxy  with  the  iqipnmmate  amount  of  credit  he  prc^ioses  to 
grant  eadi  customer  and  the  terms  of  the  credit.  The  premiums 
quoted  by  the  company  are  based  on  the  merits  of  the  i)roposal. 
It  would  be  impossible  for  the  company  entertaining  this  class 
of  risk  to  fix  a  tariff  except  on  a  very  broad  basis,  as  it  must 
readily  be  seen  that  the  standing  of  the  customer,  tiie  period  of 
credit,  the  country  in  whidi  the  customer  is  domiciled,  and  many 
cdier  factors  must  influence  the  rate  of  premium. 

"No  hard  and  fast  policy  has  yet  been  drawn  up,  nor  is  it 
possible  to  devise  a  simple  form  to  meet  the  various  needs  of 
the  commercial  community.  In  specific  accounts  insurance  alone 
three  forms  of  pdicy  are  generally  used:  First,  a  policy  to  cover 
Mll-of-exdiange  transactions  iq>  to  a  special  turnover;  second,  a 
similar  policy  to  cover  open  accounts;  and,  Aird,  a  policy  to 
cover  a  specific  period  (usually  12  months)  against  the  event 
of  the  insolvency  of  the  customer  occuring  within  the  agreed 
period.  In  the  third  form  the  policy  is  issued  for  an  amount 
whidi  the  applicant  estimates  to  be  tiie  largest  figure  that  wiB 
be  owing  by  the  customer  at  any  one  time,  ^  no  account  is 
taken  of  the  actual  turn-over. 

**Until  quite  recently  the  proportion  of  the  risk  entertained  has 
been  limited  to  one-half,  but,  with  more  experience  to  guide 
the  underwriting  company,  this  has  been  extended  to  three- 
fourths,  and  there  is  no  reason  why  ultimately  the  insunnoe 
conqMuiy  should  not  act  as  the  exporter's  guide  and  accept  the 
whole  'del  credere,'  but  tins  would  mean  a  much  closer  mutual 
understanding  than  at  present  exists." 

In  1916  the  Associated  Chambers  of  Commerce  of  Great 
Britain  adq[>ted  formal  resolutions  asking  for  some  form  of 
insuring  fore^  credits,  but  it  was  then  thought  that  die  idea 
would  not  be  practicaL  British  bankers  criticised  the  plan  on  the 
ground  that  a  commercial  bank  should  not  conduct  credit  insur- 
ance or  purchase  bills  "without  recoiorse,"  because  of  the  high 


FOREIGN  CREDITS 


185 


proportion  of  "mercantile  risk"  involved  with  the  risk  of  the 
purely  financial  and  personal  credit  of  buyer  and  seller  in  trans- 
actkms.  This  critkism  was  supported  by  quite  a  number  of 
bankers  whose  opinkms  were  asked  on  the  subject 

Special  committees  representing  various  trades  appointed  by 
the  Government's  Board  of  Trade  to  study  after- war  problems 
took  up  the  matter  of  studying  tiie  resolutions  of  the  Associated 
Chambers  of  Commerce  with  the  result  that  the  oflkial  reports 
of  these  committees  influenced  the  semi-government  body  whidi 
esUblished  the  British  Trade  Corporation,  to  incorporate  an  in- 
surance feature  in  that  institution's  program. 

In  connection  wiA  this  British  effort  to  assist  its  exporters  by 
establishing  some  form  of  credit  insurance.  **The  Americas,"  the 
publication  of  the  National  City  Bank  of  New  York  City  says: 
''Some  idea  of  the  probable  working  of  the  British  plan  may 
possibly  be  irtrtti^H  from  the  official  recommendations  of  the 
committees.  They  aslod  for  a  guarantee  of  specific  bills,  based 
upon  the  credit  of  the  foreign  consignee.   It  was  jwrticularly 
stated  that  the  British  trade  corporation  should  organize  a  com- 
plete credit  survey  of  foreign  countries,  obtaining  much  of  its 
mformation  from  the  conunercial  banks,  which,  the  committees 
thought,  would  be  willing  to  ke^  the  corporation  informed  about 
the  credit  of  foreign  firms,  inasmuch  as  its  insurance  facilities 
would  probably  assist  them  in  their  banking  business,  if  sudi 
information  were  kept  in  confidence.   And  upon  the  information 
tlius  gathered,  the  corporation  ought  to  be  able  to  found  very 
accurate  averages  of  credit  experiences,  and  by  varying  from  the 
average  tn  tiie  case  of  individual  for^  conrignees,  quote  a 
premium  on  specific  bills  in  case  of  business  with  them.  The 
committees  regarded  it  as  a  probable  business  development  that 
British  eaqporters  would  be  able  to  charge  the  insurance  premiums 
to       customers,  oflEsetting  the  charge  by  the  reduction  in  the 
price  of  the  goods  irinch  bang  insured  of  immediate  payment 
would  enable  them  to  make.    In  the  course  of  Ae  repwt  of 
the  textile  committee  it  was  stated: 

"It  has  been  brought  to  our  notice  by  several  witnesses,  though 
we  have  not  been  able  to  obtain  any  reliable  details  on  the  sub- 
ject, tiiat  diere  exists  in  Germany  a  form  of  insurance  company 
which  is  willing,  for  a  commisskm  of  about  4  per  cent  to  guaran- 
tee  approved  lon?r-dated  bills  of  foragn  trade.  Thus,  for  in- 
stance, this  German  company  is  said  to  guarantee  to  the  German 


186  EXPORTING  TO  THE  WORLD 


manufacturers  the  due  payment  of  bills  accepted  by  Russian 
purchasers. 

*The  existence  of  such  a  financial  institution  would,  undoubt- 
edly facilitate  the  granting  of  credit  in  the  export  trade.  The 
insorance  company  wotild  be  able,  by  its  agents  and  branches,  to 
have  on  its  books  firms  m  foreign  countries  to  whom  they  would 
be  able  to  give  an  insurance  credit  of  a  certain  amount  so  that 
the  intending  purchaser,  at  the  time  of  his  purchase,  would  be 
able  to  say  that  the  credit  asked  for  would  be  guaranteed.  The 
endorsement  by  the  insurance  company  of  the  bills  given  would 
make  them  laigdy  marketable  securities^  and  would,  when  they 
approach  the  last  six  months  of  maturity  hnag  them  as  n^iotia- 
ble  instruments  within  the  discounting  functions  of  the  ordinary 
joint  stock  bank.  The  functions  of  such  an  insurance  company 
could  well  be  covered  by  the  British  Trade  Bank.  It  is  a  business 
which  requires  the  greatest  care  and  skill,  but  should  be  quite 
posable  of  attainmoit  The  main  objections  would  be  tiiat  a 
firm  of  standing  asking  for  credit  would  probably  not  be  willing 
to  consider  that  they  should  be  guaranteed,  because,  in  fact,  the 
cost  of  the  guarantee  would  fall  upon  their  purchase.  We  attach 
great  importance  to  the  establishment  of  the  finest  possible  finanr 
cial  intdHgence  department  in  connectioii  with  the  proposed 
British  Trade  Corporation,  so  that  traders  in  tiiis  country  and  the 
Colonies  may  not  be  dependent  on  competing  countries  for  in- 
formation, which  is  absolutely  essential  if  credit  is  to  be  given 
with  reasonable  safety." 

London  Paper  Explains 
Credit  Insureme. 

The  ''London  Times"  m  its  issue  of  Aug.  16, 1919,  comment- 
ing upon  credit  insurance  and  its  bearing  upon  foreign  trade 
gives  a  very  clear  explanation  of  the  operation  of  credit  insur- 
ance. It  says: 

"Insurance  of  credit  seems  promised  an  important  place  in 
both  oversea  and  domestic  commerce.  The  way  in  which  it 
would  facilitate  over-sea  commerce  may  be  illustrated  by  an 

example.  An  English  manufacturer  may  be  offered  the  busi- 
ness to  an  importer,  say,  in  Brazil,  on  the  strength  of  six 
months'  credit.  He  him  self  knows  nothing  ajbout  the  financial 
standing  of  the  firm  in  Brazil.  He  would  therefore  go  to  an 
English  insurance  institution  which  would  be  in  communica- 


FOREIGN  CREDITS 


187 


tion  with  a  similar  institution  in  Brazil  The  Brazilian  insti- 
tution would  investigate  the  credit  on  the  spot,  and,  if  it 
found  the  credit  satisfactory,  the  institution  would  be  expected 
to  retain  part  of  the  risk  and  receive  a  pro  rata  proportion 
of  the  premium.  The  English  institution  would  complete  the 
transaction  by  giving  the  English  manufacturer  indemnity 
to  the  extent  of  three-fourths  of  the  sums  insured.  The 
Brazilian  exporters  could  likewise  insure  their  British  credits. 

**The  Brazilian  exporter  might  have  no  means  of  knowing 
the  financial  standing  of  the  importing  house  in  the  United 
Kingdom,  but  he  could  cover  himself  by  insuring  through  a 
British  office,  whidi  would  be  in  a  position  of  having,  or  being 
able  to  secure,  accurate  information.  Precisely  the  same  sort  of 
transaction  would  take  place  in  connection  with  trade  between 
Great  Britain  and  the  Scandinavian  countries,  or,  indeed,  any 
other  countries  in  the  world. 

^'By  such  methods  as  these  an  intelligence  system  of  an  ex- 
tremely valuable  character  would  be  gradually  evolved  for  the 
benefit  of  international  trade.  The  system  would  be  greatly 
strengthened  by  reason  of  the  fact  that  all  the  correspondents 
in  supplying  information  would  have  a  direct,  substantial  in- 
terest in  its  accuracy.  The  development  of  suchascheme  would 
relieve  manufacturers  of  much  of  the  worry  they  now  expe- 
rience in  respect  of  the  credits  they  may  give,  and  it  would 
allow  them  to  devote  themselves  more  freely  to  their  principal 
business,  which  should  be  the  improvement  of  their  production. 
It  would  not  relieve  them  altogetiier  of  thought  respecting  the 
financing  of  their  business,  since  they  would  still  be  required  to 
bear  a  proportion  of  the  risk.  But  for  this  proviso  they  would 
obviously  be  encouraged  to  reckless  trading.  Many  cases  are 
known  in  which  merchants  have  refused  to  bear  even  50  per 
cent  of  the  risk  and  wanted  to  insure  the  whole  of  the  credit. 

"Another  example  may  be  given  to  show  the  working  of 
credit  insurances.  A  has  been  in  the  habit  of  granting  mod- 
erate credit  by  supplying  goods  to  B,  a  customer  domiciled 
at  home  or  abroad.  B  wishes  to  increase  the  credit  received 
from  A,  possibly  in  consequence  of  the  present  higher  level  of 
values.  A  feds  that,  considering  B's  capital,  the  larger  credit 
is  more  than  he  is  justified  in  giving.  A  has  no  reason  to 
doubt  the  bona  fides  or  the  solvency  of  B,  but,  as  everyone 
else,  be  likes  to  limit  his  risks. 


188  EXPORTING  TO  THE  WORLD 


**A  goes,  therefore,  to  the  insurance  company,  explains  the 
position  and  is  at  once  asked:  "Have  you  contracted  to  part 
with  your  goods  to  B?"  If  the  answer  is  "'Yes/'  then  the 
amapuiy  declines  to  insure.  If  the  answer  is  "No/'  the  next 
step  is  for  the  company,  by  various  means  at  its  disposal,  to 
make  inquiries  as  to  B's  standing.  Assuming  the  result  of  these 
inquiries  to  be  satisfactory  the  company  grants  an  insurance 
for  a  percentage  of  the  debt,  leaving  A  to  carry  the  balance 
at  his  own  risk 

•*The  consequence  is  that  A,  assuming  a  share  of  the  risk,  has 
proved  that  he  believes  B  to  be  sound.  The  insurance  company, 
through  its  own  inquiries  has  confirmed  A's  opinion.  The  two 
parties  consequently  have  checked  each  other's  informatioo.  If 
ever  they  should  prove  to  have  heen  wrong  and  B  fails  tiien  tiie 
procedure  will  be  for  the  insurance  company  to  see  that  the 
claim  is  a  proper  one.  There  are  certain  traps  to  avoid.  It 
might  be  that,  although  A  has  agreed  to  bear  part  of  the  risk, 
he  has  not  really  done  so,  for  there  are  various  ^means,  such 
as  holding  some  secret  security  or  having  some  tet-off  against 
the  debt  by  which  tins  state  of  things  could  occur.  Strict 
clauses  are  necessary  in  the  policy  to  insure  that  A  really  does 
share  part  of  the  risk.  Otherwise  the  safeguard  of  the  double 
opinion  referred  to  above  is  nuUihed^ 

* 

How  LasM€S 

Are  Settled 

'^'Supposing  the  loss  is  found  to  be  in  order  and  is  admitted 
by  the  insttraoce  ccunpany,  then  it  must  still  be  borne  in  mind 
tiiat  the  company  is  an  insurance  office  and  not  a  bank.  The 

marine  underwriter  does  not  pay  a  total  loss  in  respect  of  every 
ship  which  runs  ashore.  He  first  sees  what,  if  any,  is  the  pros- 
pect of  salvage.  He  pays  the  final  loss  only  when  ascertained. 
So,  too  with  credit  insnranoe;  it  is  the  final  loss  whadi  b  pay- 
able. Obviously  there  must  be  finality.  It  has  therefore  been 
the  practice  in  Ae  past  to  settle  the  loss  either  six  months  after 
the  default  or  when  the  assets  have  been  realized,  whichever 
date  is  the  earlier.  This  procedure  is  really  the  same  as  that  fol- 
lowed with  all  kinds  of  insurance,  and  no  doubt  A's  banker 
would  finance  him,  if  necessary,  in  the  meantune^  oo  the  security 
of  the  insurance  policy. 


FOREIGN  CREDITS 


189 


"The  foregoing  is  a  brief  outline  of  the  foundations  on 
which  it  would  seem  credit  insurance  should  be  based.  There  are 
many  varieties  of  it— the  insurance  of  bills,  of  open  accounts, 
and  of  the  whole  of  the  firm's  debtors— and  these  call  for  dif- 
ferent forms  of  policies  and  different  arrangements.  Of 
course,  difficulties  will  have  to  be  faced,  but  no  reasonable 
grounds  exist  for  delay  in  furthering  such  a  scheme.  The 
present  time*  in  addition  to  the  extreme  urgency  of  encour* 
aging  export  trade,  is  particularly  appropriate  for  developing 
it,  since  British  banks  are  now  opening  branches  abroad,  and 
it  is  hoped  that  the  banks  will  be  willing  to  lend  their  sup- 
port and  even  take  a  direct  interest  in  the  promotion  of  the 
necessary  institutions. 

•'If  credit  and  debts  were  known  to  be  ultimately  secure, 
that  scramble  for  safety  which  causes  a  financial  panic  would 
certainly  be  moderated,  and  possibly  prevented  altogether. 
Insurance  has  already  done  immeasurable  good  for  the  com- 
munity,  and  in  this  direction  of  safeguarding  credit  a  bril- 
liant future  of  public  service  would  seem  to  be  before  it." 

Relations  Between 
Merchant  and  Underwriter. 

The  "Times"  in  a  subsequent  artide  oontmned  its  discussion 

of  credit  insurance,  with  particular  reference  to  the  reladcMis 
between  the  merchant  and  the  underwriter : 

"In  a  recent  article  which  was  published  describing  the 
present  condnct  and  prospects  of  credit  insurance,  an  example 
was  given  of  a  merchant  who  was  asked  to  extend  the 
credit  given  to  another  firm,  in  the  shape  of  goods 
dehvered,  and  approached  an  insurance  company  in 
connection  with  the  proposal.  The  pdnt  was  made  that  the 
first  question  put  by  the  insurance  compuiy  would  be 
whether  the  firm  had  contracted  to  part  with  the  goods,  and 
that  if  the  answer  were  in  the  affirmative,  the  company  would 
decline  to  insure  the  credit.  If,  however,  no  such  contract 
had  been  made,  then  the  company  would  proceed  to  deal 

with  the  proposal. 

"As  the  reason  for  this  line  of  action  is  often  not  fully  appre- 
ciated by  business  firms,  it  will  be  useful  to  explain  the  prin- 
ciple. The  position  is  somewhat  analogous  to  the  procedure 


190  EXPORTING  TO  THE  WORLD 


in  marine  insurance.  It  is  asstuned  in  the  case  of  a  ship 
or  goods  which  it  is  intended  to  send  by  vessel,  that  when 
the  insurance  is  olfered  the  voyage  has  not  been  started.  In 

practice,  cargo  is  sometimes  insured  after  a  voyage  has  com- 
menced, but  that  is  because  the  goods  may  have  arrived 
shortly  before  the  vessel  left  port  and  the  merchant  did  not 
egqpect  that  the  shipment  would  be  included;  but  in  all  such 
cases  the  fact  is  f»ie  of  wMch  underwriters  expect  disclos- 
ures* 

Mmme  and  Cre^ 

Insurance  Practice. 

**Wlien  the  State  war  risk's  scheme  of  insurance  was  in 
Operation  the  government  o^ce,  as  a  general  rule,  would 
not  accept  the  insurance  of  cargo  by  vessds  which  had  left 
port,  although  in  the  later  days  of  hostilities  this  attitude  was 
modified  to  the  extent  that  voyages  between  ports  supposed 
to  be  comparatively  safe  were  occasionally  accepted  after 
the  ship  had  started.  As  communication  on  commercial  mat- 
ters during  the  war  was  exceedingly  difEcult  and  the  mer- 
chants wett  constantly  without  late  news  of  their  goods, 
such  belated  insurances  were  frequently  offered  to  under- 
writers and  insurance  companies.  Often,  partly  because  by 
that  time  an  underwriter  or  insurance  company  might  have 
a  full  line  on  the  vessel  or  cargo,  higher  rates  of  premium 
had  then  to  be  paid.  Presumably  the  decision  of  the  go\  - 
crmnent  authorities  not  to  accept  insurances  of  this  kind 
yms  based  on  the  argument  that  ^e  proposer  might  have  had 
later  information.  There  was  the  possibility  of  superior  in- 
formation. For  instance,  a  merchant  might  have  reason  to 
believe  that  a  submarine  had  been  operating  in  the  vicinity 
of  the  ship  and  so  might  desire  to  increase  his  insurances. 
In  any  case,  the  venture  had  started. 

"So  in  the  case  of  credit  insurance.  The  time  for  effecting 
insurance  is  before  the  risk  commences.  The  proposer  is 
assumed  to  have  no  superior  knowledge  than  the  insurance 
company  to  which  he  submits  the  rislc  All  the  knowledge 
which  he  may  have  at  his  disposal  respecting  the  standing  of 
the  customer  to  whom  he  is  proposing  to  extend  the  credit 
should  be  at  the  disposal  of  the  insurance  company.  Also, 
he  undertakes  to  bear  a  proportion  of  the  risk  himself,  there- 


FOREIGN  CREDITS 


by  proving  his  good  faith.  Once  he  has  undertaken  to  part 
with  the  goods,  or  has  parted  with  them,  the  risk  has  started; 
in  the  same  way  as  the  risk  starts  in  the  marine  insurance 
when  the  vessel  sails  from  port. 

"In  many  trades  there  are  no  written  contracts,  and  so  the 
time  when  the  manufacturer  or  merchant  parts  with  his 
goods  is  the  *vital'  moment.  In  other  trades  the  important 
moment  arrives  when  a  contract  is  signed  or  a  signature  is 
placed  to  a  letter  accepting  an  order  in  which  definite  terms 
are  specified.  If  he  does  not  approach  the  insurance  com- 
pany before  this  'vital'  moment— L  e.,  when  the  risk  com- 
jnences— there  is  a  feeling  in  tihe  underwriter's  mind  that  some 
information  or  rumor  may  have  reached  the  proposer  which 
may  have  led  him  specially  to  seek  protection.  The  pro- 
poser may  thus  have  some  ulterior  motive  in  desiring  insur- 
ance whkh  is  not  known  to  the  insurance  company. 

How  Bu^ness  Volume 

Affects  Premium  Rates 

"The  attitude  of  the  proposer  for  credit  insurance  should 
be  that  of  a  man  who  is  offered  a  new  position  and  seeks  a 
safeguard  of  insurance  to  enable  him  to  accept  it  It  is  on 
such  lines  that  a  very  large  business  should  be  possible,  to 
the  great  advantage  of  British  oversea  commerce. 

"During  the  war  business  in  the  European  countries  was 
conducted  mainly  on  a  cash  basis.  There  are  signs  now,  with 
a  very  gradual  reversal  of  commerce  to  peaceful  conditions, 
of  credit  being  frequently  asked.  British  firms  must  in  many 
cases  be  prepared  to  give  it  or  let  the  business  go  to  coun- 
tries where  it  may  be  obtained.  The  position  of  British  firms 
will  be  very  much  simplified  in  granting  the  desired  credit 
by  being  able  to  secure  the  assistance  of  British  insurance 
companies  in  bearing  a  large  ptoportbn  of  the  risk. 

"The  larger  the  volume  of  credit  insurance  transacted  the 
lower  should  be  the  level  of  premium^s  tend.  Naturally,  in 
cases  where  the  merchants  only  offer  to  the  underwriters  a 
small  percentage  of  their  business  that  gives  them  particular 
reason  for  uneasiness.  Higher  rates  are  apt  to  be  quoted 
than  when  the  underwriters  are  offered  a  large  volume  <rf 
business,  including  risks  of  varying  character.** 


m  EXPORTING  TO  THE  WORLD 


Credit  Insurance 
•ft  Germany 

The  need  of  further  facilities  of  credits  is  recognised  in  Ger- 
mmy,  as  the  merchants  of  that  country  have  heen  working  on 

plans  along*  the  lines  adopted  by  Great  Britain.  Dr.  Emil  Hcrz- 
felder,  director  of  the  Hermes  Insurance  Bank,  which  combines 
a  limited  credit  insurance  with  discounting,  says  in  a  recent 
article: 

The  estahltshmcnt  of  a  wepmtt  hisurance  con^aiiy  is  war^ 
ranted  on  the  gfround  of  increasing  necessity.  As  a  result  of  the 

recent  inflation  credit  relations  have  become  much  more  uncer- 
tain, and  in  some  places  the  amounts  of  credit  have  rolled  up 
to  such  huge  sums  that  the  striving  for  the  thrusting  ofT  of  a 
part  of  the  risk  t^oa  idiottlders  more  c^^aUe  of  hearing  the 
burden  is  fiyely.  Qises  are  growing  more  and  more  numerous  in 
which  it  is  not  the  creditor  but  the  debtor  who  requires  a  guaran- 
tee of  a  third  party.  The  employment  of  credit  as  capital  for 
merchants  and  manufacturers  who  are  efficient  but  lacking  in 
funds,  in  the  rehahilitatkm  of  their  concerns,  obviously  seriously 
affected  by  the  war,  will  open  up  another  apbm  of  activi^  to 
the  new  company  in  the  poriod  of  tran^tion  and  also  bter  on." 

Credit  Insurance 
Not  New  Device 

Certain  forms  of  credit  insurance  have  been  in  existence  not 
only  in  Em^and  and  Germany  for  many  years,  but  m  America 
as  wen.  Thus  says 'HThe  Americas 

"In  Germany  insm-ance  banking  has  been  carried  on  by  pri- 
vate merchant  bankers  just  as  the  acceptance  by  proxy  through 
established  London  houses  of  world-wide  credit  for  a  considera- 
tk»  gave  rise  in  London  to  the  'acceptance'  as  we  have  just 
begun  to  know  it  in  thb  country.  These  German  firms,  strongly 
entrenched  in  Hamimrg,  are  the  ones  referred  to  ^e  British 
committees  and  their  operations  are  very  well  known.  For  a  con- 
sideration bearing  from  one-tenth  of  one  per  cent  to  four  per 
oent  of  tiie  amount  involved  they  wouki  assume  the  risks  of  over- 
teas  merchandiitng  credits  hi  ahnost  any  manner  tiwt  coukl  be 
asked  of  them. 

"A  German  manufacturer  or  trader,  with  a  transaction  pend- 
ing, was  able  to  go  to  one  of  these  houses  and  obtain  an  option 


FOREIGN  CREDITS 


193 


upon  his  guarantee  of  the  credits  involved  at  a  fixed  rate.  He 
could  go  on  with  the  transactkm  or  not,  as  he  saw  fit,  but  lie 

could  figure  exactly  on  the  financing  of  it,  because  the  Hamburg 
insurance  banker  would  give  him  a  rate  for  guaranteeing  the 
paper  at  once^  so  that  he  could  rdy  an  absolute  sale  of 
his  bill  for  cash  hnmediatdy,  and  figure  upon  that  Or  the  in- 
surance banker  would  offer  to  discount  without  recourse,  or  buy 
his  bill  outright.  If  the  exporter  was  willing  to  wait  till^his 
goods  reached  the  purchaser,  who  would  accept  them  and  thus 
elimmate  the  'mercantile  risk*  of  a  miscarriage  of  the  trade,  the 
insurance  banker  would  take  his  paper,  with  only  the  customer's 
liability  to  become  insolvent  or  shirk  his  debt,  at  a  much  lower 
rate.  He  would  give  the  German  a  particularly  easy  rate  if  he 
only  desired  insurance  on  half  Iht  risk  and  carrying  half  the 
credit  on  his  own  account.  He  would  also  insure  credit  trans- 
actions on  "open  account"  and  sometime  make  a  cash 
arrangement  in  connection  with  these.  The  great  German  com- 
mercial banks  have  erroneously  been  credited  with  giving 
German  export  business  tiie  services  as  a  matter  of  patriotumu 
They  may  have  taken  bills  of  favored  concerns  'without  re- 
course,' but  they  did  not  give  the  privileges  to  ordinary  German 
manufacturers.  It  was  the  insurance  bankers  who  did  this,  and 
they  charged  for  it  and  made  a  lucrative  business. 

Kind  of  CredU 

Insurance  Needed 

"In  this  country  we  have  had  a  system  of  domestic  credit  in- 
surance which,  however,  would  not  serve  the  purposes  for  which 
exporting  manufactturers  now  demand  the  new  facilities.  Our 
credit-uidemnity  companies  have  insured  the  selling  merchant 
against  excessive  losses  from  all  his  transactions,  or  from  a  fixed 
aggregate  of  transactions  covering  a  certain  period  of  time. 
To  do  this,  they  commonly  make  an  examination  of  a  merchant's 
records  and  arrive  at  an  average  of  his  credit  experiences. 
They  study  his  line  of  business  and  his  methods,  also  his 
customers.  They  then  offer  him  a  contract,  with  restrictive 
conditions  he  must  live  up  to  in  granting  credits,  by  which 
for  a  certain  amount  they  agree  to  indemnify  him  for  losses 
running  in  excess  of  a  certain  percentage  of  his  gross  busi- 
nesi.  Th^  lima  yhrtaally  insure  him  against  excessive  losses 


m  EXPORTING  TO  THE  WORLD 


from  changes  in  general  economic  conditions,  etc.,  rather 
than  from  the  particular  losses  from  specific  transactions. 

''What  the  exporters  of  Ei^laiid,  the  United  'Sutes  and 
Germany  are  demanding  is  an  absolute  insurance  of  the  col- 
lection in  full  of  specific  bills,  by  a  big  concern  of  financial 
weight  sufficient  to  make  its  guarantee  on  a  bill  the  equiv- 
aknt  of  a  Ing  bank's  'accqytance'  of  oat,  as  far  as  negotiability 
13  concerned.  When  a  bank  'accepts'  a  bill,  it  guarantees  to 
future  buyers  of  that  bill  that  it  will  be  paid  when  due  with- 
out question  or  delay,  and  thus  enable  the  maker  to  sell  it  at 
a  prime  valuation.  The  bank,  however,  'accepts'  only  upon 
the  understanding  that  it  will  have  recourse  to  the  maker, 
^  man  who  sold  the  goods,  if  the  buyer  should  fail  to  pay. 
The  bank  gives  a  guarantee  only  to  the  holder  of  the  bill. 
It  will  pay  him,  but  it  will  proceed  to  collect  the  money  from 
the  exporter  here  if  his  foreign  customer  refuses  to  pay.  What 
tiie  exporters  who  now  demand  credit  insurance  desire,  is 
that  some  strong  institution  will  take  a  small  commissioii  and 
guarantee  the  payment  of  bills  so  that  they  can  obtain  their 
cash  by  selling  their  bills  and  have  no  further  liability.  It 
is  a  perfectly  reasonable  wish  for  carrying  the  liability  upon 
bills  during  transit  and  collection  limits  their  ability  to  obtain 
credit  for  doing  more  business.  Moreover,  it  is  the  rule  for 
manufacturers  to  add,  say,  two  per  cent  to  their  prices  as  a 
margin  of  guarantee  to  cover  an  imaginary  or  real  average 
of  loss  through  bad  credits. 

"'Almost  any  one  would  rather  be  able  to  pay  one-half  of  1  per 
cent,  have  Ms  credits  all  guaranteed,  and  use  the  l}i  per  cent  in 
meeting  competition,  or  increasing  the  profit  Tlie  service  of  a 
feasible  credit  insurance  would  be  double ;  it  would  enable  manu- 
facturers to  trim  prices  and  it  would  virtually  add  to  their  work- 
ing ca^tal.  German  manufacturers  are  now  demanding  that  this 
Govennnent  recognize  die  national  aspects  of  tiiese  economic 
features  of  credit  insurance  and  ^tmr  reoommendatkms  for  a 
State  bureau  to  guarantee  export  Wlls. 

'The  commercial  banks  of  this  country  and  England,  which 
are  so  strongly  organized  with  foreign  branches  as  to  be  able  to 
know  the  credit  of  fcmign  buyers  intimately,  have  often  been 
criticised  because,  on  the  strengtii  of  their  foreign  credit  knowl- 
et^  tiiey.  do  not  buy  outright,  without  recourse  to  tfie  sdler, 
and  on  the  credit  of  the  consignee,  the  bills  of  exportatioOt 


FOREIGN  CREDITS 


195 


charging  a  reasonable  commission  for  the  sendee.   The  banks 

have  resisted  the  temptation  to  take  these  profits,  on  the  ground 
that  they  must  confine  themselves  to  pure  banking  risks,  and  the 
••meicantile  ri8ks"--as  they  are  caUed-~of  foreign  collections  are 
not  withm  the  reahn  of  commercial  banking.   In  actual  foreign 
business  the  bulk  of  difficulty  in  makmg  f  ordgn  collection  arises 
not  from  the  dishonest  refusal  of  foreign  merchants  to  pay  but 
from  refusals  to  accept  consignments  because  of  a  wide  range  of 
reasonable  misunderstanding  between  the  parties.    Busy  manu- 
facturers and  merchants  are  not  given  to  careful,  detailed  des- 
cription in  tiieir  correspondence.  The  buyer  writes  a  brief  order 
with  one  idea  in  his  mmd;  the  exporter  fills  it  conscientious^ 
with  another  in  his.  A  few  months  ago  an  Argentine  manufac- 
turer of  bathtubs  sent  an  order  to  the  United  States  for  galvan- 
ized iron  sheets.  When  the  sheets  arrived  at  Buenos  Aires  he 
refused  to  take  them.  The  whole  correspondence  was  referred 
10  a  mediary.   Botfi  principals  it  is  evident  from  the  records, 
acted  in  absolutely  good  faith.  The  Argentine  expected  Imt^' 
sheets;  he  received  perfect  *'gray"  sheets.    At  the  worst  tiie 
American  concern  was  careless.  Both  are  financially  responsible. 
But  a  bank  tiiat  would  have  bought  the  bill  for  that  shipment 
outright  would  have  been  at  a  loss  for  it  The  variation  of  tiiese 
miscarriages  of  commerce  is  legion. 

"The  "problem"  of  insuring  foreign  bills  will  be  comprdiend- 
ed  ahnost  entirely  in  the  question  how  to  fix  a  premium  that  will 
fit  an  average  'mercantile  risk.'  It  can  be  solved,  undoubtedly. 
The  British  Trade  Corpotation  has  arranged  witii  a  well-known 
marine  msurance  company  to  be  its  credk-insurance  department. 
The  marine  underwriters  of  England  are  tiie  worid's  most  ver- 
satile judges  of  risks  of  all  kinds.  Lloyds  will  consider  any 
kmd  of  risk  submitted  to  them,  it  is  said. 

To  Be  a  Success 
Premium  Must  Be  Lm 

-It  is  entirely  feasible  to  judge  of  particular  "mercantile  risks.** 
But  to  be  a  success  the  prenuum  must  be  tew.  It  wiU  probacy 
become  highly  competitive.  If  we  take  up  tiie  insurance  of 
foreign  bills  over  here  there  is  no  doubt  that  while  thf 
insuring  institution  will  write  its  full  guaranty  of  a  bill  as  bene- 
fiting a  buyer  of  the  bUl  in  order  to  make  msured  bills  freely 
negotiable,  it  wiU  have  a  contract  pving  it  mome  against  the 


m  EXPORTING  TO  THE  WORLD 


maker  in  case  of  palpable  errors  in  tnisiness  transactions.  It 

might  require  a  general  bond  of  the  insured,  covering  a  range 
of  business.  It  might  require  'acceptance*  of  the  bill  in  ad- 
irance  by  a  bank,  and  then  insure  against  the  mercantile  risks 
imly.  Or  it  might  employ  some  practicable  system  of  inspection 
of  the  goods  to  see  if  orders  and  documents  conform  exactly  to 
specifications.  Special  laws  might  be  adopted,  holding  exporters 
to  stringent  compliance  with  certain  standards  when  they  insnre 
transactions.  It  has  even  been  suggested  that  some  great  cor- 
poration should  combine  express  business  or  forwarding,  pack- 
ing, and  insurance.  This  would  give  it  full  control  over  the 
physical  merchandise,  and  enable  '4  to  make  sure  of  the  met- 
cantik  risks.' 

"It  has  been  said  by  advocates  of  this  proposed  facility  for  our 
commerce  that  the  establishment  of  world-wide  credit  insurance 
in  international  commerce,  either  by  one  or  more  very  large  in- 
ttitntkins,  or  by  groups  of  smaller  companies  working  closely  as 
underwriters  do  would  automatically  diminish  the  mercantile 
risks  of  trade  by  forcng  both  exporters  and  importers  to  conform 
absolutely  to  standards.  A  general  vogue  of  insurance  at  f  lactioii- 
al  rates  would  with  its  economies  make  it:  well  nigh  impossible 
ior  escporters  to  export  or  importers  to  import  without  it.  A 
record  of  continuous  bad  practice  on  the  part  of  an  exporter, 
or  many  refusals  to  accept  goods,  without  the  very  best  reason, 
on  the  part  of  an  importer,  would  soon  result  in  his  being 
classed  as  a  bad  risk,  with  a  high  premium  on  his  business,  or 
exchision.  It  would  enf<Hrce  cai^ul  Iiyti4iitig  of  exportatlons 
and  discourage  captious  or  dishonest  refusals  to  accept  importa- 
tions." 

Hmf  ta  Collect  Overdue 

Accounts  in  Foreign  Field 

It  should  be  understood,  that  the  credit  man  often  runs  up 
against  the  situation  involved  in  the  collection  of  a  poor  ac- 
count in  the  foreign  market.  This  is  natural.  It  often  hap- 
pens that  some  sort  of  a  collection  machinery  most  be  put 
into  action  to  force  pajrment  from  a  customer  whose  credit 
standing  is  not  of  the  best.  This  is  a  regular  thing  in  the  local 
market.  Collection  agencies  thrive  on  this  sort  of  business. 
It  is  not  di£&cult  for  the  manufacturer  to  turn  over  the  col- 


FOREIGN  CREDITS 


197 


lection  of  a  bad  account  to  one  of  these  agciicie»-«iid  they 

generally  do  the  work. 

But  when  there  is  a  bad  account  to  collect  in  a  foreign 
country  what  must  the  credit  man  do  about  it?  If  the  manu- 
facturer or  es^rter  has  a  branch  office  in  the  foreign  country 
where  Ae  bad  account  exists  the  matter  is  not  so  difficult.  Col- 
lections will  be  made  just  Uke  it  is  done  by  other  concerns  in  that 
particular  field.  But  for  the  manufacturer  or  expcMter  who  falls 
victim  to  a  foreign  customer  on  an  open  account  proposition 
when  he  has  not  the  adequate  facilities  to  enforce  coUection  the 
problem  of  collectioii  becomes  a  difficult  one. 

Foreign  Aceomi 
Difficult  to  ColUet 

It  is  generally  more  difficult  to  make  coUectkms  from 
foreign  customers  than  it  is  from  domestic  merchants.  The 
distonce  between  seller  and  buyer  gives  the  latter  a  sense  of 
security.  He  knows  that  the  seller  will  find  himself  in  aU 
sorts  of  trouble  in  endeavoring  to  effect  a  collection. 

Sometimes  the  failure  to  pay  is  not  the  fault  of  the  debtor, 
however.  The  shipment  of  goods  contrary  to  mstructions 
is  a  none  too  rare  occurrence  among  American  manufacturers. 
This  causes  misunderstanding.  It  may  finally  be  setUed  after 
kxng  drawn  out  correspondence.  In  instances  of  this  kind  the 
best  thing  for  the  manufacturer  to  do  is  to  settle  the  matter 
as  smoothly  as  possible.  He  should  be  Uberal  in  a  compromise. 
It  is  the  best  way  out.  Where  the  customer  is  behind  m 
his  payments  the  nature  of  the  indebtedness,  the  state  and 
conditbn  of  the  debtor,  and  his  locality  must  be  considered. 
The  nature  of  the  indebtedness  may  vary  from  a  small  item 
on  an  open  account  to  a  large  sum;  it  may  be  merely  delay  in  pay- 
ment, a  refusal  to  pay,  or  hiaWlity  to  pay,  either  official  (bank- 
ruptcy), or  inofficial,  or  finaUy  plain  tedc  of  available  funds  to 
meet  the  obligation. 

It  catena  happens  where  the  rate  of  exchange  is  constantly 
changmg  from  week  to  week  that  the  foreign  merchant  awaits 
a  favorable  opportunity  for  the  setttemeat  of  his  account  This 

may  often  cause  several  weeks  of  delay,  and  Ihe  manufacturer 
might  be  tempted  to  write  his  customer  a  letter  "dunning"  him 
for  his  money.  The  manufacturer  should  be  very  careful  in 
the  use  of  his  language  in  the  coUection  of  an  account  of 


'm  EXPORTING  TO  THE  WORLD 


this  character.  An  insultiiig  letter  from  the  manufuctiifer's 
cmrespondence  department  may  cause  the  loss  of  thousands 

of  ddlars  worth  of  business  for  the  year. 

There  are  instances,  of  course,  where  it  is  necessary  to  com- 
pel prompt  settlement  on  the  part  of  foreign  buyers.  Mr.  Archi- 
bald J.  Wolf e>  who  compiled  a  i^qK>rt  on  foreign  credits  for 
the  Bureau  of  Foreign  and  Domestic  Commerce  explains  the 
metiiods  that  should  be  employed  in  collecting  a  bad  .debt.  "A 
bank  may  be  well  employed  to  press  a  draft  to  the  debtor,"' 
says  Mr.  Wolfe.  "Full  details  should  be  submitted  to  the 
bank  at  the  same  time,  and  a  courteous  letter  should  be  writ- 
ten alao  to  the  debtcnr.  If  this  fails,  the  customer  is  phunly 
an  undesirable  one.  It  will  be  then  necessary  to  wei^h  on 
the  one  hand  the  cost  and  the  probable  chances  of  litigation,, 
and  on  the  other  hand  the  amount  of  the  claim  made  by  the 
delinquent.  It  may  be  frequently  worth  while  to  agree  to  the 
unjust  claim  and  communicate  the  incident  to  the  mercantile 


• 

fl4 

The  difficulty  may  he  in  some  of  these  cases  so  delicate  that 
the  credit  man  might  do  well  either  to  intrust  his  claim  to 
a  bank  in  the  debtor's  city  with  instructions  to  handle  it 
through  its  attorney  or  to  turn  it  orer  to  some  such  institution 
as  the  f ore^  collection  bureau  maintained  by  the  National 
Association  of  Manufacturers. 

"In  the  case  of  delay  due  to  a  temporary  embarrassment  it  is 
necessary  to  judge  each  case  on  its  own  merits.  The  wise 
credit  man  will  immediately  make  a  searching  inquiry  into 
the  financial  standing  of  his  customer  in  order  to  learn 
whether  an  improvement  may  be  soon  looked  for.  In  many 
instances  a  little  patience  will  retain  a  faithful  and  a  desirable 
customer  temporarily  short  of  funds  while  in  other  cases  prompt 
and  decisive  action  is  vindicated.  It  all  depends  on  the  standing 
of  the  customer,  the  thoroughness  of  fiitfttyHal  informalioo, 
and  on  die  d^;ree  of  security  the  credit  enjoys. 

*Where  the  debtor  is  dishonest  the  creditor,  evidently  had 
been  negligent  in  granting  credit  to  an  undeserving  customer. 
Such  accounts  are  the  most  difficult  to  collect" 

Collections  Should  Be 
Made  am  Their  Menu 


In  endeavoring  to  collect  a  bad  aceoont  by  cofftftpcii4ence 


FOREIGN  CREDITS 


199 


it  has  been  the  custom  among  some  American  merchants  to 
make  pleas  for  their  money  on  a  varied  number  of  grounds. 

Some  confess  that  their  funds  are  low  and  they  need  the  money ; 
others  state  that  the  prices  at  which  their  goods  were  sold 
aiesokywtfatttitisimpoasibletocixtetMli  credit  It  is  questic»iable 
whether  such  metihods  of  obtaining  remittances  of  old  accounts 
are  productive  of  good  results.  It  is  usually  done  in  the  United 
SUtes  but  such  methods  have  often  been  condemned  by  the 
more  enlightened  members  of  credit  associations.   It  seems  that 
the  best  argument  for  demanding  settlement  of  an  account  is 
that  it  is  due,  and  that  the  money  rightly  belongs  to  the  mer- 
chant who  made  the  accommodation.   A  letter  along  these  lines 
can  easily  be  written  by  an  experienced  correspondent.   He  can 
use  tact  and  diplomacy— and  force,  without  the  necessity  of 
admitting  into  the  correspondence  a  list  of  wteak  reasons  why 
the  foreign  customer  should  pay  hb  t»lL  Perhaps,  tiie  best  way 
to  remind  a  foreign  buyer  of  the  necessity  Of  meeting  his  bills 
promptly  is  to  insist  on  the  payment  of  a  regular  rate  of  interest 
from  the  time  of  the  invoice  date  until  the  account  is  paid.  In 
countries  where  there  exist  high  interest  rates  this  will  inspire 
customers  to  settle  th^  obligatkma  with  promptness. 


Claims  Against 
Bankrupt  Estates 

An  attorney  having  eieperience  in  foieign  countries  or  a 
bank  having  branches  in  tiie  foreign  country  where  the  debtor 
resides  should  always  be  consulted  in  the  matter  of  collect- 
ing claims  against  bankrupt  estates.  The  manufacturer  will 
learn  that  many  foreign  countries  have  strict  regulations  per- 
taining to  the  filing  of  claims  against  insolvent  estates  within 
a  certain  time  limit,  or  to  representation  of  fore^  daims, 
or  to  the  form  in  which  powers  of  attorney  and  proofs  of 
claims  are  to  be  made  out.  So  many  different  features  enter 
into  the  claims  against  bankrupt  estates  in  foreign  countries 
that  good  business  judgment  dictates  that  they  should  not 
be  handled  direct  The  collection  bureaus  of  good  standing 
as  well  as  many  banks  are  in  a  position  to  handle  such  daii 
for  a  nominal  fee. 

In  most  foreign  countries  it  is  unnecessary  to  prove  the  ac- 
count item  for  item,  where  an  acceptance  or  note  is  sui 


800  EXBORTING  TO  THE  WORLD 


evidence  of  the  claim.  For  this  reason  it  is  much  more  difficult 
to  sue  on  open  accounts  in  most  foreign  countries.  In  placing 
drafts  in  the  hands  of  banks  for  collection  care  must  be  taken 
by  the  manufacturer  that  he  instruct  such  institutions  to  pro- 
tect them  within  the  required  limit  in  case  of  nonpay- 
ment, if  there  is  reason  to  believe  that  the  drafts  will  not  be 
taken  up.  A  non-protested  acceptance  in  a  foreign  country 
amounts  to  nothing  more  than  an  evidence  of  indebtedness. 

Amenem  Mmmfachtrers  al 
DisodvatUage  m  Suing 

Foreign  creditors  are  at  a  disadvantage  when  suing  in  many 
countries.  For  this  reason  they  should  endeavor  to  avoid 
Udgatiim  if  possible.  Once  gettii^  into  the  courts  the  Ameri- 
can manuficturer  not  only  loses  money,  and  time  but  suffers 
the  disadvantage  of  not  being  able  to  present  his  case  ef- 
fectively. Unless  it  is  possible  to  settle  amicably  out  of 
court,  or  the  claim  itself  is  of  sufiicient  importance,  resort  to 
litigation  as  a  last  recourse  is  then  advisable. 


Chapt£k  XIII 


HANDLING  AN  ORDER 


Method  of  handling  orders  determines  manufacturkr's 
SUCCESS — Customer's  instructions  must  be  closely  fol- 

LOWBD— CONFIDBNCS  OF  FOREIGN   CUSTOMER  MUST  BE  WON — 
ExECUnVB  ABIUTY  IN  HANDLING  OKDEBS. 


A  manufacturer  can  either  kill  or  create  a  splendid  export 
business  in  accordance  with  the  method  he  adopts  in  the 
handling  of  his  first  order.  If  the  first  order  is  to  represent 
the  b^inning  of  a  lucrative  export  business  the  manufacturer 
must  devote  that  tsme  and  attention  to  it  that  he  did  when 
he  received  his  first  order  from  a  domestic  customer.  Busi- 
ness is  not  built  up  on  the  first  order.  It  is  not  the  order  that 
comes  in  through  the  mails  or  other  sources  today  that  counts. 
It  is  the  order  of  tomorrow  or  the  next  day  or  next  month  or 
year  that  is  gmng  to  determine  the  manufacturer's  success  or 
failure  in  business.  If  the  manufacturer  has  established  a 
fixed  policy  of  not  engaging  in  foreign  business  then  he  should 
IX)litely  refuse  to  accept  business  from  foreign  quarters.  Ex- 
port trade  is  not  meant  to  satisfy  the  whim  of  the  moment. 
To  be  worth  while  it  must  be  permanent,  and  to  be  perman- 
ent it  must  be  intelligently  handled.^ 

1  In  this  country  today,  scarcely  a  popular  magazine  article  on  the  subject  of 
trfaning  foreign  markets  or  "grabbing"  the  export  trade  fails  to  teU  a 
the  painful  experience  of  this  or  that  foreign  purchaser  of  American  ^^ea,  cawea 
by  the  /.mcrican  way  of  looking  at  the  export  trade.  The  story  ttsualljr  mns  that 
tbe  foff«in  buyer  had  at  length  decided  to  risk  an  order  with  American  manu- 
factaren  and  that  the  first  Aipment  of  the  American  goods  proved  very  satis- 
Srt^  It  may  be  that  a  aeeond  shipment  was^  obtained  and  proved  equally 
StiJKtory.  but  at  about  this  Stage  th^  foreign  buya-  was  shocked  to  receive 
a  «ply  to  one  of  his  new  ordeiiito  the  effect  that  the  "f^^I 
was  so^  busy  in  supplying  the  domestic  market  that  he  could  not  botier  with  fhe 
onier  at  that  time.  This,  of  course,  disrupted  the  business  of  the  foreign 
l^^wS»  ?rwilSy  aMOOnced  tliat  this  would  be  his  last  experience  with  Amer- 
\^ ^Z^n^sL^tmiiy  turned  to  the  German  nj^nufacturers  from  whom 
he  knew  he  could  expect  more  courteous  and  businesslike  ^HH^^f'. 

Altliough  this  story  is  hackneyed,  the  fact  "^YXwrX  tSf^lff^?tei 

eler  who  returns  from  a  business  trip  abroad  and  who  is  able  to  8^n«^"*»«J«; 
pubUslwd  in  the  magazines  tells  a,  story  along  this  hne  would  seem  to  prove 
Siat^maxiT  foreign  buyers  of  American  merchandise  have  had  such  disagreeable 
SWt^SJu  SSSr  American  manufacturers.  The  American  manufacturers  have 
h^S^rSflrh^tivity  S  the  ^^Stous  home  market  in  the  United^  States  that 
?hey  hav?  ^St  deemed  fSreS»  toST^h  working  for.  When  some  foreign  trade 
has  comJ  ?o  them  bv  one  chance  or  another,  they  have  regarded  it  as  Tying  at 

201 


202  EXPORTING  TO  THE  WORLD 


A  foreign  otstomer^  no  matter  in  what  section  of  the  globe 
he  is  living,  is  entitled  to  the  best  possible  service  that  the 

manufacturer  can  give  in  a  manner  consistent  with  the  trou- 
ble and  risks  involved.  The  quality  of  the  goods  to  be  sent  to 
foreign  customers  should  not  be  determined  by  the  color  or 
race  of  the  person  to  whom  they  are  gmng.  The  Chinese, 
Australian,  Mexican,  Scandinavian  or  Islander  is  just  as 
much  entitled  to  serious  consideration  in  the  matter  of  orders 
as  the  Canadian  or  Englishman. 

"Here  is  a  man  from  across  the  seas  who  writes  asking 
me  to  smd  him  a  sample  order  of  my  goods/'  a  manufacturer 
says.  ^Here  is  a  diance  to  develop  a  foreign  business/'  he 
reasons.  **This  man  has  given  me  an  opportunity  to  make  a 
start.  He  has  taken  an  interest  in  the  things  I  produce,  and 
in  tlie  utility  of  my  product.  I,  on  my  part,  am  going  to  take 
an  imetest  in  his  order ;  I  shall  see  that  he  gets  a  square  deal 
and  that  his  instructions  are  closely  followed." 

As  a  result  of  this  manufacturer's  foresight  the  foreign  cus- 
tomer receives  his  samples  according  to  instructions  and  in 
very  good  condition.  He  is  pleased  with  them.  He  tells  his 
friends  ,and  his  friends  order  from  the  same  house.  The 
manufacturer's  business  grows,  and  his  aqmrt  trade  is  as- 
sured, and  all  because  he  took  his  first  carder  seriously.  He 
"delivered  the  goods." 

Customers*  Instructions 
Musi  Be  Closely  Followed 

Cases  are  none  too  rare  where  manufacturers  have  en- 
deavored to  prove  to  a  foreign  customer  that  black  is  white 

and  that  silk  is  cotton,  etc.  This  vicious  practice  enjoyed  a 
great  popularity  during  the  days  of  the  war  in  the  stampede 
to  conquer  new  commercial  markets.  Hundreds  of  American 
salesmen  fiocked  to  foreign  countries  in  the  quest  of  the 

when  production  has  beta  ao  great  that  there  has  been  a  snrpltis  of  merchandise 
foi  the  American  market  many  an  /merican  manufacturer  has  turned  with  avidity 
to  the  export  merchants  and  sought  a  chance  to  dispose  of  his  surplus  abroad. 
Such,  however,  was  only  in  incident  and  was  regarded  as  outside  the  ordinary 
course  of  trade.  Naturally,  when  the  foreign  trade  of  a  particular  manufacturing 
establishment  has  been  of  this  incidental  character,  it  has  received  only  in- 
cidcstal  and  scant  attention.    Now,  however,  if  the  American  oianufacturers  are 

foing  to  make  a  direct  effort  to  capture  foreign  trade,  this  attitude  «ust  be  changed, 
he  foreign  customer  must  receive  the  same  careful  consideration  that  the  do- 
mestic customer  receives.  He  must  not  be  disappointed  and  made  to  feel  that  the 
American  manufacturer  cares  litte  whether  he  has  his  trade  or  not.  Regularity 
in  meeting  the  wishes  of  the  foreign  customers  is  *ffrthlli^ — Mitrtilitffil  Utiill, 
No.  57  BwtMa  of  Foreiga  and  Domestic  Conuncrce. 


HANDLING  AN  ORDER 


903 


"golden  fleece,"  dragging  along  with  them  trunks  full  of 
samples  and  catalogues  representing  American  manufactured 
articles.  With  their  stocks  running  low  during  the  trying 
days  of  the  war  foreign  customers  purchased  right  and  left 
in  great  quantities  and  when  actual  shipments  of  orders  were 
finally  made  months  later  they  discovered  to  their  sorrow 
that  the  goods  were  not  according  to  sample  and  that  instruc- 
tions had  been  loosely  followed.  The  majority  of  these  crimes 
must  be  laid  at  the  doors  of  concerns  new  in  the  export  game, 
however,  and  not  at  the  doors  of  the  pioneers  in  the  business. 
The  unfortunate  part  about  it  was,  nevertheless,  that  foreign 
customers  did  not  discriminate  between  good  and  bad  houses 
in  the  United  States  but  condemned  the  "Yankee"  generally 
for  his  sharp  practices. 

What  was  the  result^ of  this?  Here  is  an  illustration.  A  well- 
known  Chilian  merchant  who  fell  victim  to  some  of  these 
unscruptdous  traders  toM  the  audior  on  the  day  the  armistice 
was  signed  the  following:  **You  can  say  to  some  of  your 
business  men  in  the  United  States  that  I  am  through  with 
them.  They  have  had  a  fine  opportunity  to  build  up  a  fine 
trade  with  the  Chilian  merchants  but  they  have  thrown  it 
away  owing  to  their  methods.  We  have  been  forced  to  buy 
from  you  because  we  could  buy  nowhere  else.  Now  that 
the  war  is  over  we  shall  go  back  to  our  friends  in  Europe. 
Your  merchants  have  lost  a  splendid  opportunity  to  establish 
a  permanent  business  here." 

Not  long  ago  a  customer  from  Ecuador  ordered  a  consign- 
ment of  suspenders  from  an  American  manufacturer.  The 
merchant  plainly  wrote  that  black  suspenders  were  required. 
Instead  of  following  instructions  the  manufacturer  sent  the 
suspenders  in  assorted  colors  believing,  perhaps,  that  "they 
were  just  as  good."  But  he  did  not  reckon  with  his  customer. 
The  shipment  came  back.  The  manufacturer  did  not  get  his 
money.  Nearly  three  months  were  required  to  straighten  out 
a  little  matter  that  could  have  been  intelligently  attended  to 

in  the  first  place. 

The  Ecuador  merchant  might  have  had  a  reason  for  de- 
siring black  suspenders.  The  American  manufacturer  might 
have  had  a  reason  for  sending  a  shipment  in  assorted  colors. 

He  should  have  given  it  in  a  letter  accompanying  the  goods, 
and  couched  in  polite  terms,  explaining  his  inability  to  fill 


m  EXPORTING  TO  THE  WORLD 


the  Ofder  as  had  been  requested,  and  askiiig  if  the  cdort  he 
was  sending  would  prove  satisfactory.  This  he  did  not  do— 

and  he  lost  the  confidence  of  the  customer. 

Quite  a  contrast  is  the  method  employed  by  a  New  York 
wiaard  in  the  export  business  which  extends  to  the  Orient 
where  trade  has  been  developed  with  Chinese  merchants. 
This  expert  not  long  ago  received  an  order  from  a  Chinese  im- 
porter for  electrical  parts.  As  it  happened  the  manufacturer 
was  not  making  any  more  of  the  kind  desired,  but  he  had 
enough  on  hand  to  partially  fill  the  order.  Did  the  wizard 
substitute  all  the  new  goods  for  the  old  ones  and  send  the 
shipment  along  to  his  Chinese  customer?  He  did  not  But 
this  is  how  he  worked  it:  He  filled  as  mudi  of  the  order  as  he 
could  with  what  he  had  left  of  the  old  stock,  and  sent  samples 
of  the  new  kind  along  with  a  letter  asking  the  merchant  to 
carefully  examine  them  and  if  he  found  them  satisfactory  to 
communicate  with  him  in  New  Yoric  and  the  balance  of  the 
order  would  be  promptly  filled.  The  Chinese  merchant  was 
satisfied.  Those  who  understand  the  methods  of  dealing  with 
Chinese  merchants  will  readily  agree  that  the  wizard  knew 
his  business. 

Confidence  of  Foreign 

Customer  Must  Be  Won 

If  there  is  any  doubt  in  the  mind  of  the  manufacturer  that 
the  order  he  is  about  to  send  to  a  foreign  customer  will  not 

be  satisfactory,  or  suggest  an  attempt  to  "put  something 
over"  he  should  by  all  means  hold  it  until  it  is  possible  for 
him  to  fill  it  according  to  instructions  or  until  he  has  received 
authorization  to  make  whatever  changes  may  be  necessary. 
A  dissatisfied  customer  is  worse  than  no  customer  at  all.  A 
dissatisfied  customer  by  word  of  mouth  can  do  great  injury 
to  an  American  manufacturer  who  consistently  endeavors  to 
cut  sharp  corners  in  his  dealing  with  foreign  customers.  The 
necessity  of  strictly  adhering  to  mstructicms  is  illustrated  in  a 
story  the  author  recently  heard  r^rding  a  shipment  of  pen- 
cils to  an  importer  m  the  Far  East.  The  importer  had  re- 
ceived a  shipment  of  these  pencils  with  the  trademark  slightly 
blurred.  The  pencils,  themselves,  were  satisfactory,  however, 
and  some  months  later  another  order  specifying  exactly  the 
same  brand  was  sent  in.  On  the  second  order  the  HnXty 
fMrintmg  of  the  trademaric  had  been  corrected  and  m  the  course 


HANDLING  AN  ORDER 


205 


of  time  shipped.  When  the  order  reached  the  importer  it 
proved  to  be  unsatisfactory.  The  origmal  trademark  was 
missing.  The  pencils  went  back  to  the  factory  with  the  fol- 
lowing note: 

*T  am  sorry,  but  I  cannot  use  these  pencils.  The  trade  is 
now  accustomed  to  the  pencils  with  the  blurred  trademark, 
and  I  wish  you  would  send  them  to  me  in  that  way."  The 
factory  at  home  saw  the  point.  The  methods  of  printing  the 

trademark  on  the  pencils  were  slightly  rearranged,  and  to  this 
day,  the  story  goes,  there  is  a  reason  for  blurred  trademarks 
on  a  certain  kind  of  pencil  in  the  Far  East 

Liability  of  Seller 
to  Fmimk  Goods 

Two  points  should  be  remembered  in  handling  export  orders. 
One  is  that  the  seller  is  bound  by  the  acts  of  his  agent  in  foreign 
countries  as  long  as  the  latter  does  not  violate  the  specific 
instructions  given  him.  The  only  time  when  a  manufacturer 
may  place  the  responsibility  on  his  agent  is  when  he  exceeds 
his  authority.  If  the  agent  does  this,  he  alone,  is  responsible. 
Another  point  to  be  remembered  is  that  in  accepting  orders 
from  foreign  customers  the  manufacturer  or  sh^E>per  should 
have  it  specifically  written  in  the  contract  or  agreement  that 
he  shall  not  be  held  responsible  for  contingencies  beyond  his 
control.  Unless  this  is  written  in  the  contract  or  agreement 
the  courts  of  the  United  States  or  Great  Britain  will  hold  him 
f<Mr  a  breach  of  contract.  The  manufacturer  is  bound  to  ship 
his  goods  at  all  costs  or  suffer  tiie  consequences  unless  he  in- 
cludes the  clause  referred  to  in  his  agreement  of  sale.  This 
is  not  the  law  in  other  countries,  however. 

The  manufacturer  must  be  very  careful  that  the  date  of  the 
bill  of  lading  is  in  accordance  with  the  actual  shipment. 
''Shipment  in  January^  means  shipment  some  time  during 
that  month  and  not  in  February.  If  the  manufacturer  is  un- 
able to  ship  his  goods  on  the  specified  date  he  should  com- 
municate with  his  customer  to  obtain  authorization  to  change 
the  date. 

Executive  Ability  in 
Handling  of  Orders 

The  capable  handling  and  the  intelligent  interpretation  of 


206  EXPORTING  TO  THE  WORLD 


txport  orders  rests  with  the  export  manager.  The  business 
may  fall  or  rise  in  the  ratio  of  the  export  manager's  skill. 

The  duties  of  the  export  manager  in  relation  to  his  customers 
abroad  cannot  be  better  told  perhaps,  than  in  an  editorial  ap- 
pearii^  in  '<The  WcMrld's  Marketo"  published  by  R.  G.  Dun 
and  Co.  The  editorial  says: 

"There  is  scarcely  an  export  executive  today  who  is  worthy 
of  the  name  but  who  has  in  the  past  four  years  overhauled 
his  whole  system  of  handling  export  orders,  from  their  first 
receipt  to  the  final  payment.  Indeed,  there  is  a  constant  pro- 
cess of  revision.  Systems  entirely  adequate  in  normal  times 
have  been  made  watertight  ag^jlnst  war  time  storms — and 
they  will  remain  watertight  i^^ainst  the  unusual  conditions 
which  will  arise  from  time  to  time  even  in  most  normal 
periods. 

"Foreign  buyers  appreciate  the  change.  Nowadays,  when 
buyers  are  in  the  United  States  and  visiting  the  factories 
whkk  supply  them,  the  visits  are  not  alone  of  a  social  char- 
acter, nor  devoted  merely  to  trips  through  the  factory  to  see 
the  latest  laboratory  triumphs  and  automatic  machinery.  In- 
stead, can  be  seen,  from  San  Francisco  to  Portland,  Maine, 
buyer  and  seller  with  heads  close  together,  working  out  ways 
and  means  to  overcome  the  various  obstacles  which  He  be- 
tween the  goods  on  the  factory  floor  and  their  safe  receipt 
in  a  foreign  warehouse. 

"Nor  is  it  enough  for  the  exporter  merely  to  keep  abreast 
oi  the  mandatory  regulations  at  home  or  abroad.  Unless  he 
steeps  himself  in  the  spirit  of  the  times,  unless  he  comes  to 
know  tendencies  before  they  become  facts,  he  is  doing  his 
foreign  customers  a  grave  injustice  and  working  the  cables 
overtime.  Every  outgoing  mail  from  the  good  exporter  car- 
ries with  it  letters  of  warning  of  chamred  conditions,  and 
indications  of  the  way  probable  regulations  will  affect  both 
buyer  and  seller. 

"The  present  situation  is  not  taken  by  the  serious-minded 
export  man  as  a  wonderful  opportunity  for  ready-made  ex- 
cuses to  cover  slow  deliveries.  Rather  is  it  accepted  in  the 
best  of  spirit  as  an  opportunity  to  display  executive  ability 
In  complying  in  the  letter  and  the  spirit  with  the  wishes 
of  governments,  yet  contesting  against  artificial  handicaps 


HANDLING  AN  ORDER  2W 

to  maintain  for  his  customers  abroad  the  steady  arrival  of 
merchandise. 

Htwards  for  those  Who 
Play  the  Game 

•The  rewards  have  been  great  for  those  who  have  played 
the  game.  It  became  apparent  to  those  whose  enlightenment 
comes  from  within  that  the  imperative  need  of  the  first  few 
months  of  the  war  was  the  creating  in  the  minds  of  their 
foreign  customers  of  a  thorough  and  abiding  confidence  in 
the  exporting  manufacturer.  'Strange  things  are  going  to 
happen/  they  said  to  themselves,  'and  unless  our  good  friends 
thousands  of  miles  away  are  willing  to  trust  to  our  judgment 
and  honesty  we  shall  be  woefully  handicapped  and  they  will 
be  robbed  of  profits  entirely  possible,  provided  they  have  con- 
fidence in  us.' 

"These  far-seeing  executives  appreciated  even  as  early  as 
the  closing  months  of  1914  that  their  position  was  to  be  re- 
lieved of  the  task  of  selling  goods,  and  that  their  abilities 
were  to  be  taxed  with  the  problem  of  deliveries. 

"Today,  many  an  export  executive  is  still  virtually  a  manag- 
ing partner  of  thousands  of  merchants.  He  not  only  decides 
what  to  ship,  but  also  when  to  ship  it  and  the  prices  at  which 
the  merchandise  shall  be  forwarded.  One  of  the  ablest  mer- 
chants in  the  Far  East  has  picked  out  the  dozen  sources  of 
supply  in  which  he  has  the  greatest  confidence,  and  left  with 
each  the  message:  'You  are  to  ship  me  anything  which  you 
feel  that  we  can  resell  at  a  profit,  in  any  quantities  which  you 
can  spare,  by  any  means  which  you  may  think  advisable, 
whether  it  be  a  row-boat  or  an  18,000-ton  liner.  Bear  in 
mind  that  I  am  still  far  more  interested  in  deliveries  than  I 
am  in  prices,  and  that  you  are  to  be  the  sole  judge  as  to  the 
price  at  which  our  lines  are  to  be  invoiced.'  The  executives 
honored  by  such  a  trust  can  scarcely  be  considered  as  less 
than  managing  partners  of  this  merchant  of  the  Far  East.** 

After  all  the  business  of  buying  and  selling  involves  a  part- 
nership between  the  buyer  and  seller.  The  strength  of  this 
partnership,  however,  depends  not  so  much  on  the  capital  ^ 
invested  as  on  tiie  judgment  of  the  seller,  and  the  confidence 
and  trust  of  the  buyer  across  the  seas  in  the  man  who  is  sup- 
plying the  merchandise. 


208 


EXPORTING  TO  THE  WORLD 


Invoicing  Goads 
far  Export 

Invokes  lor  export  trade  uiTolve  many  features  tliat  are 
foreign  to  the  ckmiestic  docmnent.  Export  Invoices,  moreover, 

are  correctly  termed  "invoices"  and  not  "bills'*  as  in  some 
foreign  countries  ''bills"  are  recognized  as  bills  of  exchange, 
or  drafts. 

The  most  important  features  of  an  ideal  invoice  are  its 

accuracy,  completeness  and  clearness.  This  is  absolutely  es- 
sential in  dealing  with  a  customer  thousands  of  miles  away. 
The  customer  has  got  to  check  his  shipment  when  it  reaches 
him,  and  unless  the  invoice  is  perfect  he  will  find  himself  in 
considerable  trouble.  Instructions  from  a  foreign  customer, 
therefore,  should  be  followed  to  the  letter  in  the  matter  of 
making  out  invoices,  no  matter  how  absurd  they  may  seem 
to  be. 

NMsmy  Features 
in  Export  Invoice 

The  salient  features  of  an  export  invoice  are  these: 

Simplicity  and  clearness  in  language. 

Full  description  of  goods  invoiced,  eliminating  abbrevia- 
tions or  terms  known  to  the  trade  only.  Officials  who  are  re- 
quired to  examine  them  may  not  understand  these  terms. 
Foreign  customers  cannot  be  expected  to  know  them. 

Use  of  dollar  sign  before  all  prices,  extensions  and  footings. 

Complete  and  exact  weights  and  measurements  such  as 
widths,  lengths,  weights.  Guess  work  must  be  avoided. 
Figures  must  be  exact. 

Uniformity  in  handwriting  or  by  typewriter  in  making  out 

invoices. 

The  number  and  date  of  the  order. 

Text  in  language  of  the  customer  when  necessary. 

The  method  of  transportation  and  route. 

Numbers,  weights,  dimensions,  marks  and  nature  of  pack- 
ages—whether cases,  bales,  crates,  barrels,  bags,  sacks,  etc 
Terms  of  carriage. 

Separate  code  word  for  each  item  to  fadlttate  ttttnact 
to  it  by  cable. 
Invoice  of  each  item  m  the  shipment 


CUSTOMCRS  OROCR  Na 
CUR  OROIR  NO. 


IheRemingiqnArmsUnidn  Neiallic  Cartridge  CdmpanyXinc) 

MANUFACTURERS  OF 

BHaTBUNB,  MILITAHY  &  BPORTINIl  RIFLES  &  AMMUNITICIH  DF  ALL  KINDS 

WOOLWORTM  RUILOIN9 

'    233  BHUADWAY 

NKwYaHK    APRIL  26,1917« 


CABLE  ADDRESS  HARTUV  NEW  YORK 


REMINGTON 
UMC 


TERMS 

90  OAn  8I0HT  SRAfT     SOLOTO  C.STBVBNSOir  4  CCUPtHK 

SANTIAGO  CHIU. 


100 


U4 


smPPCO  VIA.  "BAMB  07  8TSA1IER" 


WEIGHTS  «WfL6BI5_ 
•uiuMEDC  I  EACH  CASE  I  EACH  CASE 
NUMBERS   I  iKTLM.    MMMIM.    MCT  KIbM  WtOM KILOS 


190      206  66.27 


101/102     151      16}  66.59 


105A04     199       221  90.25 


105A06    176      196  79.82 

107/106     224       246   101. 58 


109A10     216       240  97*95 


DCSCmPTION 


99.42 


75.92 


100.21 


66.6C 


112.46 


106.64 


10 


10 


Ul/112     122      150  55.32 


U    CARTRICCES  CALIBRB  ^2  8%W 
inA8.25xl}x9|«  1  CASK 

X    CARTRIfiOn  CMiXBtS  96  SMT 
IBAB.l5ixl?xlO|«       2  CA8B8 

U    Vm  CLUB  CAIVrRIDGE8  l6  GAUGE  LOAD  565 
iaA8.29|xl7xlO*        2.  CA8S8 


X    NITRO  CLtIB 
1ISAB.15X 


106      142  46.07 


106       142  48.07 


66.0S 


64.4< 


64.40 


20  iRisinroTO] 


X    RaUNGTON  CARZRIi)6£8. 

iaAB.l5x9x9*' 

U    ARROV  CARTRI DG 
lC£A8.l5x9|x9i* 


UNIT  PRICE 


lUgb  load  B1< 


LOAD  7*4 
A8ES 


8  12  GAUGS  LOAD 
2  CA8X8 


10 


10 


fO  RHUS  KODBL  12A  22  qiSLim 
»9i*         2  CA8S8 


-5 


D.1 


RBflNCTOV  AUTOLOADIITG  8H0TGUH3  X/llA  12  (^AtKJfi 
XBAB.56|xl6|xl6»       1  CA8I 

RSUIKGTOir  RSPEATHrO  8R0TGU178  UODICL  lOA  li  GAtTOS 
1IIBA8.56ixl6^xl6"       1  CASE 


CASas  marebd:. 


VALPARAISO 

A  specimen  of  an  Export  Invoice.   Manufacturers  have  dilTcrent  forms  drawn  up  in  distinct  metliods.    Terms  of  payment,  marking,  weights  in  pounds  and  kilos  and  meas- 
urements of  each  case  will  be  noted  here. 


EXPORT  VALUE 


TOTA>..NeT 


HANDLING  AN  ORDER 


209 


Invoice  of  material  for  which  no  charge  is  made,  such  as 
catalogues  or  electrotypes. 

Invoice  of  accessories  of  spare  parts  for  which  no  charge  is 
made  with  value  attached. 

Gross  and  net  weight  of  each  package,  and  number. 

Gross  and  net  weight  of  each  package  when  a  number  of 
them  are  bound  together  so  as  to  form  one  package,  as  well 
as  gross  weight  of  whole. 

Conver8k>n  of  value  of  invoice  into  foreign  currency,  when 
necessary,  at  the  foot  of  invoice. 

Signature  of  responsible  member  of  firm  or  official  having 
authority  to  sign  for  firm. 

Placing  at  bottom  of  invoice  and.O.  £."  (errors  and 
omissions  excepted),  tlm  gives  shipp^  right  to  correct 
errors,  etc. 

Other  Essential  Details 

in  Connection  With  Invoice 

It  b  good  practice  to  always  supplement  the  invoice  with  a 
letter  explaining  in  fuller  detail  the  shipment,  and  giving  all 
the  additional  information  that  the  customer  may  desire  to 
know.   If  the  letter  is  sent  in  advance  of  the  shipment  the 

customer  may  want  to  know  the  name  of  the  steamer  on 
which  the  goods  are  being  sent,  the  date  of  the  shipment,  the 
route  to  be  followed,  and  information  regarding  transshipment 
as  well  as  probable  arrival  of  the  steamer  at  destination.  Ex- 
port invoices  should  be  made  out  in  triplicate.  When  deaHi^ 
with  the  bank  more  are  necessary  as  the  bank  will  require 
two  invoices.  The  third  one  will  go  to  the  customer. 

Discounts  should  be  calculated  and  deducted  on  the  face 
of  the  invoice  so  that  the  net  costs  will  appear  with  each 
exteHsiottt 

Other  Doeumenis  in 

Connection  with  Invoice 

Sometimes  all  additional  expenses  are  enumerated  in  the 
commercial  invoice,  such  as  transfer  to  steamer,  ocean  freight, 
insurance,  etc.  The  better  form,  however,  is  to  limit  the  in- 
voice purely  to  the  cost  of  the  goods.  Additional  expenses 
should  be  incorporated  in  a  separate  sheet  known  as  a  State- 


210  EXPORTING  TO  THE  WORLD 


ment  of  Charges.  This  Statement  of  Charges  will  include  the 
invoice  total  as  well  as  additional  charges  as  have  already 
been  indicated.  The  Statement  of  Charges  must  always  be 
attached  to  the  invoices. 

A  Packing  List  or  Measurement  Note  indicates  what  each 
case  contains  as  well  as  its  net  and  gross  weight,  and  qsbic 
nticasiirements. 

A  iM>tice  of  a  draft  by  shippers  indicating  the  amount  and 
terms  of  the  draft,  and  the  method  of  collection  is  customary 
in  export  trade. 

Additional  papers  such  as  certificates  of  inspection,  analysis, 
weight,  etc.,  may  be  demanded  in  varioas  countries.  The 
shipper  should  consult  the  omsuls  of  the  countries  to  which 
his  goods  are  going  for  information,  on  the  matter. 


Chaptbr  XIV 


PACKING  FOR  EXPORT 

Inexperienced  exporters  are  to  blame  for  poor  packing — 

MBSCBANmSB  MUST  BE  SECURELY  PACKED— POOR  PACKING  MEANS 

LOSS  OP  ORDERS— Factors  to  be  considbred  in  packing  rat  bx- 

j  oRT — Kind  of  packing  required  for  shipments  for  export — 
How  machinery  is  packed  for  shipment — Foreign  require- 
ments MUST  BE  MET  IN  PACKING — ^EFFECT  OF  WEIGHT  ON  CUS- 
TOMS DimB»— RbGULATIONS  IN  OyUNtRIBS  THAT  MAY  AFISCT 
PACKING— How  CASES  FOR  EXPORT  SHOULD  BE  MARKED. 

American  manufacturers  and  exporters  have  been  accused 
by  writers  in  the  pc^mlar  trade  magazines,  and  hy  foreign 
merchants  of  being  negligent  in  the  matter  of  properly  padt- 
ing  merchandise,  for  foreign  destination.  While  it  would  be 
difficult  to  run  down  the  basis  for  such  a  sweeping  criticism, 
nevertheless,  in  justice  to  the  pioneer  American  foreign  trade 
merchants  it  must  be  said  that  business  men  from  foreign 
countries  have  often  appkttded  and  pointed  out  to  their  fellow 
men  the  efficiency  of  the  American  exporter's  packing,  and 
emphasized  the  necessity  of  copying  his  methods  in  order  to 
satisfy  the  overseas  merchants.  It  would  seem,  therefore, 
that  the  monopoly  of  proper  packing  is  not  confined  solely  to 
European  or  other  foreign  fields.  There  is  no  doubt  that  a 
great  volume  of  merchandise  leaving  American  ports  arrives 
in  a  damaged  condition  at  its  destination  owing  to  negligence 
in  packing.  But  if  one  should  trace  this  trouble  to  its  source 
one  would  likely  find  that  this  is  due  to  inexperience  and  ig- 
norance on  the  part  of  the  hundreds  of  American  manu^* 
turers  and  eiporters  who  are  as  yet  new  to  tte  foreign  trade 
game.^ 

1  That  the  packing  and  shipping  methods  used  hf  locomotive  exporters 
are  ^  not  inferior  to  those  employed  in  other  countries  is  well  shown  by  the  fol- 
lowing examples :  One  company  shipped  a  locomotive  into  Colombia  over  moun* 
tain  trails  which  necessitated  transportation  on  mule  back.  After  the  locomotive 
had  been  biiift  6ie  United  States  it  was  taken  down  and  the  parts  placed  to- 
gether in  large  cases  and  shipped  to  Medellin,  Colombia,  where  it  was  landed.  The 
pistons,  cylinders,  rods  and  other  parts  were  then  aecurcly  wrapped  in  burlap  and 

2U 


813  EXPORTING  TO  THE  WORLD 


It  is  the  purpose  of  this  chapter  to  deal  with  some  of  the 
ptinciples  and  methods  governing  packing  for  export  as  well 
UB  some  of  the  Goiiditkms  under  which  mefchandiae  is  trans- 
ported to  its  final  destination  m  foreign  countries. 


Merchandise  Must 
Be  Packed  Securely 


Merchandise  for  export  mnst  be  packed  securely.  There 

is  no  use  to  attempt  to  eliminate  costs  by  packing  goods  for 
foreign  customers  as  cheaply  as  possible.  It  is  false  economy. 
The  foreign  merchant  is  interested  in  a  shipment  that  arrives 
in  good  order  and  not  in  one  in  which  half  the  merchandise 
has  been  damaged  hj  water  or  by  rough  handling.  American 
manufacturers  are  often  tempted  to  pack  their  goods  for 
foreign  use  in  cases  that  are  inexpensive  in  order  that  they 
may  avoid  higher  quotations. 

This,  however,  is  not  sound  policy.  It  is  better  to  properly 
and  safely  pack  goods  for  export*  and  either  make  an  extra 
diaige  for  packing,  or  advance  the  quotations  to  cover  the 
entire  costs.  After  all,  the  foreign  customer  is  interested  in 
the  safe  arrival  of  his  goods  for  re-sale.  Often  these  foreign 
importers  would  rather  pay  an  additional  sum  for  goods 
properly  protected  against  damage  than  suffer  loss  as  the 

packed  on  mules,  reaching  Bogota,  after  many  days,  in  perfect  condition.  The 
locomotive  was  then  assembled  and  operated  perfectly. 

Since  the  war  began  another  locomotive  company  has  shipped  more  than  400 
locwaaUtf  to  interior  Siberia.  They  were  built  in  the  United  States,  packed  for 
atttpaMat.  sent  via  Magellan  and  the  Panama  Canal,  to  Vladivostok,  erected  in 
record  time  in  the  yards  of  the  Siberian  railroad,  and  proceeded  under  their  own 
steam  to  their  destination.  Today  they  are  hauling  the  vast  stores  of  munitions 
imported  through  the  back  door  of  Russia  from  the  Unitol  States  and  Jmvfm, 
When  the  transaction  was  completed  not  more  than  one-lMdk  of  1  per  ecat  of  die 
order  was  found  to  have  been  broken  or  lost  in  transit 

Locomotive  manufacturers  have  been  called  upon  to  ship  to  the  most  out-of- 
the-way  places  which  formerly  obtained  their  rolling  stock  from  Europe.  Engines 
have  gone  to  Katanga,  away  in  the  interior  of  Africa,  in  the  Belgian  Kongo,  to  the 
Gold  Coast,  to  Rhodesia  and  to  Portuguese  and  East  i*frica,  and  up  to  <Ute  not  a 
•angle  complaint  has  been  received,  although  it  was  the  fint  time  that  Jtmtticam 
locomotive  orders  liad  been  received  from  mese  places. 

The  first  steam  railway  in  Chosen,  connecting  Chemulpo,  on  the  seacoast  with 
Seoul,  the  capital,  was  built  and  its  equipment  ordered  from  the  United  States  as  m 
result  of  the  far-sighted  activity  of  an  American  business  man.  The  track  was  tho 
American  gauge,  4  feet  8i  inches.  When  this  road  was  extended  by  the  Japanese 
after  their  occupation  of  Korea  the  American  gauge  was  stffl  used,  and  when  tho 
South  Manchnrian  Railway  was  Imked  up  with  it  the  American  gauge  was  continued. 
American  locomotives  and  rolling  stock  have  accordingly  a  preference  in  that  market 
•M  the  bulk  of  the  equipment  is  manufactured  in  the  United  States. 

Possibly  one  of  the  most  severe  tests  for  good  packing_was  endured  by  a  caao 
■  ■■tlliiing  a  locomotive  packed  by  an  American  firm.  The  lack  of  huid-loeked 
■"feJLS?  *^l£.^*?*  f°n^°r"*v  America  compels  the  discharge  of  cargo  in  open 

foadHcada.  The  nse  and  fall  of  lighters  readera  arduonsly  dangerous  the  unloadin« 
of  heavy  merchandise.  Nevertheless,  when  a  case  containing  a  locomotive  cab  and 
locomotive  parts  went  overboard  as  a  result  of  improper  handling,  it  floated  The 
tide  swept  it  out  to  the  Pacific  for  several  miles  before  a  tug  could  overtake  it 
but  it  was  towed  back  and  finally  landed  with  the  contents  vaianaired  The 
examples  of  brilliant  enterprise  in  American  export  trade  are  too  nmnerous  for 


PACKING  FOR  EXPORT 


213 


result  of  poor  packing.  Some  American  firms  have  followed 
the  British  method  of  adding  additional  charges  for  certain 

kinds  of  packing  for  goods  that  require  it.  In  England  pro- 
fessional packing  companies  undertake  this  work  for  ex- 
porters and  make  charges  in  accordance  with  services  ren- 
dered* 

lyho  Is  Responsible  for 
Poor  Packing  for  Export  f 

If  the  manufacturer  is  exporting  direct  it  is  his  duty  to 
become  acquainted  with  all  the  requirements  peculiar  to  ex- 
port packing  as  well  as  the  existing  regulations  in  fordgn 

countries  regarding  the  packing  and  marking  of  goods.  If 
the  manufacturer  is  supplying  a  commission  house  with  mer- 
diandise  intended  for  foreign  customers  the  commission 
house  should  give  full  instructions  to  the  manufacturer  re- 
garding the  packing  of  the  goods.  The  commission  house  is 
supposed  to  know  where  the  goods  are  going,  how  they  are 
to  be  transported,  when  they  reach  a  foreign  country,  and 
how  they  are  to  be  marked,  etc.  Of  course,  if  the  manu- 
facturer violates  these  instructions  he  must  be  held  responsi- 
ble. 

Manufacturers  do  not  often  follow  these  instructions,  how- 
ever, as  the  following  statement  from  an  official  of  a  New 
York  export  house  suggests: 

"We  do  little  or  no  packing  ourselves;  the  goods  are 
packed  by  the  person  fnnn  whom  we  order  for  export  and 
the  cases  are  not  opened  by  us.  In  all  mstances,  we  give 
instructions  to  pack  most  carefully,  but  we  regret  that  our- 
selves and  our  friends  have  had,  in  very  numerous  instances, 
to  suffer  considerably  through  the  carelessness,  indifference, 
or  Ignorance  of  the  American  manufacturer  in  reference  to 
this  important  particular.  *  *  *  The  American  manufacturer 
fails  to  realize  that  while  he  may  sometimes  save  a  few 

An  old-established  manufacturing  concern  that  has  systematized  its  foreign 
bosiness  so  that  it  moves  right  along  automatically  wMi  the  dooeatie  penaita  «s 

to  describe  the  way  an  order  is  handled  by  its  forces. 

This  company  has  devoted  much  study  to  the  packing  of  merchandise  sent 
abroad,  but  the  uninitiated  onlooker  in  the  packing  room  would  notice  nothtng 
extraordinary  about  the  handling  of  South  American  shipments  if  his  attention  were 
not  speeiftcally  called  tr  it.  The  whole  thing  has  been  well  systematized.  The 
man  wfco  is  at  the  head  Jf  the  packing  department  personally  supervises  or  himself 
packs  Uie  export  stuff.    He  is  an  adept  at  this.  ... 

In  the  first  place,  he  has  had  all  his  packing  materials  assorted,  and  the  best 
of  the  wooden  boxes  are  set  aside  for  the  export  orders.  He  does  not  use  boxes 
different  from  those  needed  for  domestic  orders.  He  says  that  the  railroads  handle 
boxes  in  no  gingerly  way,  and  so  he  must  pack  well  even  for  a  100-mile  shipment. 
OiiifQr  the  taw  to  be  SMt  to  Soitth  AaMfieg  he  fiehe  tfw  beet  aheola  the  aidet 


214  EXPORTING  TO  THE  WORLD 


dollars  at  this  end  on  a  shipment,  the  buyer  in  foreign  mar- 
kets,  by  reason  of  lack  of  facilities  to  replace  broken  parts 
readily  and  cheaply,  often  has  to  pay  out  five  or  ten  times 
what  would  have  been  the  original  cost  in  this  country,  or, 
filing  to  be  abk  to  dnplicate,  there  is  lots  of  time  and  in« 
terest  on  the  value  of  the  shipment  for  the  several  mcmths 
until  parts  can  be  brought  from  this  country." 

Negligence  on  the  part  of  the  manufacturer  and  agent  alike 
is  illustrated  in  a  report  from  Consul  General  William  H. 
Michael,  of  Calcutta,  which  is  as  follows: 

''It  is  probable  that  the  reason  the  goods  were  packed  so 
poorly  for  foreign  trade  was  because  the  manufacturers 
packed  at  the  factory  for  shipment  to  their  export  houses  in 
New  York  or  other  ports,  and  the  export  agents,  instead  of 
repacking,  simply  forwarded  the  goods  in  the  original  cases. 
While  the  original  cases  were  strong  enough  and  entirely 
suitable  for  transportatk>n  from  the  factory  to  the  shipping 
port,  the  packing  was  utterly  unsuited  to  the  long  and  severe 

:8l  35  ££ynr.ii?^thWltr/^  kw 

Wherever  possible.  South  American  shipments  are  made  in  burlap  baits.  A 
large  order  from  one  of  the  west-coast  minmg  companies  for  overall  wmm 
packed  m  this  way  It  went  in  bundles  of  10  dosen  jaekctiw  Tile  TmSkM  for 
each  bale  were  carefully  stacked,  one  bundle  mn  another  in  a  tcrew  press  with 
ab<Ard  at  thcbottom  and  another  at  the  top.  The  press  was  screwed  down  till  the 
^ck  of  J  achats  occupied  less  than  two-thirds  of  its  loose  bulk.  Then  four  stout 
'«Pi5*  passed  around  the  top  and  bottom,  outside  the  boards  and  securely 

tied.  When  the  pressure  was  released,  the  bundle  was  found  to  be  pressed  hard 
together,  each  garment  so  tightly  held  that  it  was  impossible  to  move  it  without 
CHlting  the  ropes. 

c  •  J¥  *bout  10  imnittes.  ^  two^  men's  time.    The  chief  packer 

finished  the  packmar  after  the  bandlc  had  been  thrown  upon  his  work  table.  A 
Irafth  of  new  burlap^  •  fMce  of  heavv  waterproof  paper  of  the  same  size,  and 
Meets  enough  of  a  special  tough  "leather  paper"  to  cover  this  were  already  on 
the  table.  Deftly  the  packer  covered  the  bundle  in  another  10  minutes,  sewing  the 
burlap  with  heavy  twine  with  a  seam  that  knots  it  together  every  2  inches,  io  that 
■taakage  of  the  cord  anywhere  would  not  permit  the  covcrisf  to  come  oflF 

Not  all  the  company's  goods  can  be  baled  in  thia  way.  The  tight*  pressure 
weaks  composition  buttons  on  some  garments.  Others  It  is  necessary  to  box, 
bccanw  baling  would  result  in  their  reaching  the  customer  so  sharply  creased  or 
|»ressed  out  of  shape,  as  to  be  less  salable  than  when  boxed.  When  boxes  are  used, 
the  goods  are  carefully  placed  in  them  and  in  most  cases  forced  in  with  some 
pressure  in  order  that  there  shall  be  no  movement  or  any  space  of  the  box  lUW 
occupied.  A  tightly  packed  box,  securely  sailed  and  stmppedwith  iron  bands  or 
Cood  twisted  steel  wures.  will  not  coase  mn  as  easily  as  one  loosely  filled.  The 
■«■«■  used  by  this  concern  are  of  wood  about  three-quarters  of  an  inch  thick.  They 
•re  especialhr  reinforced  at  the  edges.  The  lining  of  waterproof  paper,  next  the 
wood,  and  of  "leather  paper,"  next  the  goods,  is  always  put  in  foreign  shipments. 

The  marking  and  shipping  instructions  are  especially  given  upon  the  order 
blank  which  the  packer  receives  with  the  merchandise.  The  marking  is  usually 
done  according  to  the  customer's  directions,  which  conform  to  the  customs  reqvSre- 
ments  of  the  country  to  which  the  shipment  is  bound,  with  the  rules  of  the  steam- 
ship company,  and  win  we  customer's  own  business  system.  The  btmdle  wrapr^ed 
in  burlap  was  going  to  a  mining  company  in  Chile.  It  has  its  own  rules  This 
company^s  private  mark  was  to  be  stenciled  on  the  top  of  every  bundle  or  box  and 
on  three  sides,  together  with  the  dimensions,  the  gross  and  the  net  weight  girett 
both  in  pounds  and  kilos,  and  the  name  of  the  port  of  destination.  The  aaa» 
facturmg  company  add«l  its  own  name  and  the  legend  "Made  in  U.  S.  A."  la  the 
extreme  corner  cf  oae  «de.  The  work  of  packing  and  marking  is  done  with  rapidity 
that  comes  fro<A  long  practice  fai  this  company's  shipping  room.  The  packer  had  his 
^■Ick  way  of  measuring,  weighing,  and  stenciling. 

A  special  employee  in  New  York  attends  to  the  shipping  of  foreign  goods, 
another  cooperates  in  secunne  insurance  documents,  seeing  to  consular  invoicea 
aad  billa  of  Uding,  and  indealing  with  the  bank  that  coUccta  the  dnilL  vhkk  ia  a 
iHt  <if  tfM  iiMiaitiw    ^Thm  Ammhrn,"  ^  • 


PACKING  FOR  EXPORT 


strain  of  transit  from  point  of  shipment  to  India.  If  manu- 
facturers would  either  pack  the  goods  intended  for  foreign 
markets  at  the  factory  as  they  should  be  packed,  or  require 
their  export  agents  to  take  the  goods  out  of  the  original 
cases  and  repack,  much  trouble  and  damage  to  American 
foreign  trade  would  be  overcome." 

Poor  Packing  Means 

Loss  of  Many  Orders 

A  great  number  of  eacport  orders  are  lost  to  American  manu- 
facturers and  exporters  because  they  do  not  seem  to  take 

any  interest  in  the  condition  of  the  goods  on  arrival  at  their 
destination.  A  Brooklyn  manufacturer  lost  a  fine  order  for 
machinery  for  a  merchant  in  Ecuador  because  the  packing 
in  which  it  was  contained  broke  down  upon  lyrrival  at  an  ex- 
porter's place  of  business  across  the  river  in  New  York. 
What  chance  would  such  a  shipment  have  in  a  long  voyage 
to  Ecuador? 

Manufacturers  should  follow  instructions  from  importers 
closely.  Perhaps,  some  of  these  instructions  inay  seem  queer 
but  it  must  be  remembered  that  the  importer  probably  knows 
what  he  is  talking  about.  He  has  a  reason.  He  knows  better 
than  the  manufacturer  that  certain  conditions  must  be  met 
and  he  probably  has  learned  what  packing  will  prove  satis- 
factory. 

l  actors  to  Be  Considered 
in  Packing  for  Export 

The  greatest  volume  of  our  e9qK>rt  trade  goes  to  countries 
where  transportation  facilities  are  as  good  as  in  the  most 
advanced  countries  of  the  world,  but  there  are  countries 
where  the  means  of  transportation  have  not  been  so  highly 
developed  and  where  it  is  necessary  to  ship  annually  millions 
of  dollars  in  American  merchandise.  The  problem  of  trans- 
portation, therefore,  becomes  a  factor  in  the  method  of  pack- 
ing for  export  consumption.  Goods  shipped  to  England  may 
not  require  that  degree  of  care  that  goods  shipped  to  the 
interior  of  Peru  or  Bolivia  may  demand.  Shipments  to  Can- 
ada do  not  require  any  more  attention  than  shipments  from 
New  York  to  San  Francisco.  Shipments  which  involve  rail 
and  water  transportation  may  require  a  oer^un  method  of 


«16  EXPORTING  TO  THE  WORLD 


packing.  In  some  places  transshipment  is  necessary.  Here, 
also,  the  best  packing  possible  is  necessary  in  order  that 
goods  may  not  be  damaged. 

In  order  to  efficiently  pack  for  eaqport,  therefore,  the 
factorer  most  not  only  know  how  to  pack  in  order  to  meet 
all  sorts  of  transportatk>n  conditions,  but  also  know  when 
such  packing  is  necessary.  Goods  may  be  carried  by  mule, 
burro,  llama,  bull,  and  camel  and  by  coolies.  Such  transporta- 
tion requires  a  limit  in  the  weight  of  cases.  They  should 
be  limited  to  200  <Mr  1^0  ponnds  each  as  some  of  these  beasts 
of  burden  cannot  be  overi<Mtded.  The  loads  that  various  pack 
animals  can  cany  arc  approximately  as  follows :  Mule,  200  to 
S50  pounds;  burro,  150  to  200  pounds;  llama,  about  100 
pounds;  camel,  350  to  450  pounds.  Packages  for  transporta- 
tion by  these  animals  should  be  one-half  the  forgoing  weights 
ms  one  package  is  carried  on  each  side.  Thus,  a  mule  can 
cany  860  pounds  if  divided  into  two  packages,  but  if  a  pack- 
age weighs  over  150  pounds  he  can  carry  one  only,  and  as 
this  rests  on  his  backbone,  he  can  not  carry  much  above  this 
weight.  Man  carriers  are  capable  of  carrying  from  100  to 
160  pounds. 

Climatic  Conditions 
Affect  Export  Packing 

In  Honduras  it  rains  hard  for  at  least  five  months  in  the 
year  and  freight  going  into  the  interior  covered  with  canvas 
is  usually  damaged  unless  it  is  pnyperiy  packed  to  meet  this 
condition.  A  like  conditkMi  exists  in  Ccrfombia  where  ma- 
chinery destined  for  the  interior  is  frequently  exposed  to  the 
rains.  The  rainfalls  in  India  produce  a  dampness  in  the  air 
that  may  damage  goods  not  protected  to  meet  this  peculiar 
condition.  In  Venezuela  the  tropical  moisture  may  destroy 
food  products  such  as  dried  fruit  and  cereals  if  packed  in 
cardboard  boxes.  Oimate,  then,  is  another  factor  that  de- 
termines the  method  of  packing  for  export. 

Port  C&ndiHans  Also  a 
Factor  in  Export  Packing 

In  many  ports  of  the  world  such  as  those  found  along  the 
west  coast  of  South  America  lighters  are  employed  in  getting 
merchandise  oft  the  steamer.  In  these  places  goods  are  sub- 


PACa^NG  FOR  EXPORT 


217 


jected  to  rough  handling.  The  lighters  ride  alongside  the 
ship  and  the  cargo  is  hoisted  from  the  hold  in  slings.  Each 
sling  load  usually  contains  a  variety  of  goods  from  ink  bottles 
to  dry  goods,  and  weighs  a  ton  or  more.  As  the  lighter  rises 
or  falls  with  the  waves  the  sling  load  will  endeavor  to  meet 
it,  and  there  is  a  crash.  The  well  protected  goods  are  safe, 
but  those  whkh  were  not  carefuUy  packed  to  meet  just  such 
contingencies  are  doomed.  Nor  is  this  all.  There  is  yet  to 
lemove  the  goods  from  the  lighter  to  the  quay.  More  man- 
handUng.  Once  again,  they  may  probably  require  placing 
on  freight  cars  for  shipment  to  the  interior.  These  condi- 
tions must  be  taken  into  consideration  by  the  American  ship- 
per if  he  desires  to  retain  the  good  will  of  his  foreign  cus- 
tomer. The  manufacturer  should  know  the  treatment  his 
goods  are  to  receive  in  shipment  to  a  certain  foreign  point. 
He  should,  therefore,  do  his  packing  accordingly. 

Protection  from 
Pilfering  Necessary 

Various  methods  have  been  suggested  for  packing  to  dis- 
tourage  pilfering  in  foreign  ports.  This  crime  is  quite  common 
particulariy  where  shq^ments  of  boots  and  shoes,  dry  goods, 
hardware,  notkms,  and  food  products  are  involved.  The  use  of 
tongued  and  grooved  lumber  for  boxes,  strapping  of  cases  and 
boxes  with  steel  bands,  the  use  of  wire  drawn  around  each  end 
and  the  middle  of  the  case  so  tightly  that  it  sinks  into  the 
wood  at  the  corners,  the  ends  of  the  wire  then  being  twisted 
and  cut  ck>se  with  nippers,  the  use  of  safety  dips  of  various 
kinds  to  bind  the  top  and  bottom  oi  the  case  to  the  sides- 
all  these  have  been  recommended  to  prevent  pilfering. 

In  a  circular  issued  by  the  Federal  Export  Corporation-  of 
New  York  the  following  method  is  recommended:  "Stealing 
from  export  packages  has  been  the  bane  of  the  export  trade 
for  centuries,  and  pilfering  has  become  such  a  matter  of 
course  that  longshoremen  in  foreign  ports  have  been  known 
to  strike  because  one  of  their  number  was  arrested  for  break- 
ing cases  and  stealing  goods.  The  use  of  matched  lumber, 
with  box  strapping,  will  go  far  to  retard  pilfering,  but  a  stiff 
No.  8  or  No.  10  wire,  drawn  about  the  case  so  that  it  bites 
^  into  the  wood,  will  be  the  best  preventotive.  Use  an  old- 
fashioned  fence  stretcher  to  pull  the  wire  taut,  staple  the 


118  EXPORTING  TO  THE  WORLD 


twisted  ends  fast  to  the  case  and  seal  with  lead.  Any  case 
can  be  broken  into,  so  your  success  will  be  attained  if  you 
make  it  too  difficult  to  open  wttiiottt  detection.'' 

Kinds  of  Pockmg  Riquwed 
for  SMpmenis  for  Export 

Merchandise  may  be  packed  in  cases,  crates,  or  f>ales.  The 
character  of  the  packing  generally  depends  upon  the  nature 
of  the  goods,  and  the  section  of  the  world  to  which  they  are 
destined.  Cases,  of  course,  are  the  strongest  and  best.  Paper 
or  paste-board  boxes  will  never  do  for  export  packing.  The 
inmber  used  for  the  manufacture  of  boxes  or  crates  should 
be  sufficiently  thick  to  give  ample  protection  to  the  merchan- 
dise. The  thickness  of  the  lumber  should  depend  upon  the 
weight  of  the  contents.  Lumber  as  light  as  is  consistent  with 
safety  should  be  employed  in  order  to  reduce  the  weight  of 
the  case  as  much  as  possible.  Knotty  lumber  should  be 
avoided.  If  knots  exist,  however,  they  should  be  covered 
over  with  tin  from  the  inside. 

As,  in  many  cases,  freight  is  charged  on  the  basis  of  cubic 
measurements,  it  should  be  the  aim  of  the  manufacturer  to 
pack  his  merchandise  as  compactly  as  possible.  Every  avail- 
ahle  inch  of  i^ce  should  be  utilized.  Goods  should  be  tightly 
packed  in  order  to  avoid  shifting  within  the  case.  The  manu- 
facturer should  visualize  the  career  of  a  case  from  the  moment 
it  leaves  the  factory  to  its  final  destination.  He  will  then 
realize  the  necessity  of  having  it  so  carefully  prepared  that  it 
will  stand  the  most  vigorous  handling,  and  the  contents  will 
remain  intact  whether  the  case  is  standing  on  its  head  or  on 
its  side. 

An  interesting  story  was  told  by  Captain  H.  R.  Moody, 
Q.M.C.,  U.  S.  A.,  Chief  of  the  Packing  Service  in  connectkm 
with  baling  goods  for  eaqiort  to  ^  A.  E.  F.  at  the  Sixth 
Annual  Foreign  Trade  Convention  in  Chicago.  Captain 

Moody  said:  , 

"In  no  respect  did  the  Packing  Service  effect  greater  space 
economy  than  in  the  packing  of  clothes  for  the  A.  E.  F. 
Formerly  clothing  had  gone  forward  to  troops  padced  kwsely 
in  wooden  boxes.  The  Packing  Sendee  devised  the  system  of 
baling  all  clothing,  and  a  baling  plant  was  set  up  at  the  army 
supply  base  in  Brooklyn.   The  Service  gave  scientific  atten- 


PACmNG  FOR  EXPORT 


219 


tion  to  the  proper  folding  of  garments  and  eventually,  after 

exhaustive  experiments,  developed  a  system  of  folding  tfiat 
allowed  the  maximum  number  of  pieces  to  a  bale.  It  was 
found  that  these  new  methods  saved  two-thirds  of  the  space 
that  had  been  used  formerly  for  the  shipment  of  the  same 
quantity  of  goods  in  boxes,  to  say  nothing  of  the  great  saving 
both  in  labor  and  boxing  materials. 

"The  baling  plant  in  New  York  in  the  calendar  year  of  1918 
shipped  to  France  approximately  1,000,000  bales  of  clothing 
and  textile  and  other  equipment  that  could  be  baled.  The 
saving  in  money  to  the  United  States  Government  by  this 
method  of  packing  at  this  one  plant  in  a  single  year  amounted 
to  approximately  $55,000,000.  The  largest  item  in  this  econ- 
omy was  the  matter  of  cargo  space,  which  is  estimated  at 
$49,000,000,  saved  to  the  Government  The  complete  state- 
ment of  the  financial  saving  in  the  shipment  of  these  1,000,000 
bales  is  as  follows: 

fl 

Material    $1,940J)00 

Labor    683,000 

Tare  Weight   '^^^OOO 

Caigo  Space   49,080,000 

Total   $61,078,000 

"In  addition  to  the  financial  saving  there  was  a  large  saving 
in  raw  materials  which  count  for  more  money  to  a  nation 
engaged  in  a  desperate  war.  This  million  bales  of  clothing 
saved  68,000,000  board  feet  of  lumber  which  would  have  been 
used  in  boxing,  had  the  old  system  of  packing  been  followed. 
The  lumber  which  would  have  gone  into  these  boxes  re- 
quires 30  years  for  its  growth,  while  the  burlap  covering  the 
bales  was  made  of  jute  which  is  raised  in  semi-annual  crops. 

"The  size  of  the  bale  adopted  was  30  inches  by  15  inches 
by  14  and  up  |o  19  inches.  It  is  interesting  to  note  that  this 
size  was  determined  upon  ~t>ecause  it  was  found  that  the 
burlap  covering  bales  of  this  size  would  cut  into  sand  bags 
with  a  minimum  amount  of  waste  material.  The  army  abroad 
used  great  quantities  of  sand  bags.  Thus,  by  wrapping  bales 
in  burlap  pieces  of  proper  size,  there  was  saved  a  considerable 
amount  of  cargo  space  previously  occupied  by  bated  burlap 
which  had  formerly  been  shipped  to  France  to  be  made  into 


m  EXPORTING  TO  THE  WORLD 


•and  iMigs.  It  is  also  notable  that  baled  clothing  arrived  in 
France  in  much  better  condition  than  clothing  which  had  been 
packed  in  cases." 

Captain  Moody's  report  reveals  the  tremendous  economic 
saving  that  may  be  accomplished  by  Amcricaii  shippers  if 
they  pay  dose  attention  to  packing. 

The  process  in  packing  goods  in  bales  is  sometimes  like 
this:  (a)  wrap  goods  first  in  ordinary  paper;  (b)  a  sheet  of 
canvas  should  then  be  laid  over  the  entire  bundle;  (c)  a  layer 
of  tarpaulin  or  cloth  should  follow  next;  (d)  the  final  layer 
should  consist  of  a  double  canvas  or  burlap.  The  outer  cover- 
ing is  then  tightly  sewn  with  strong  twine. 

The  necessity  of  watertight  linings  in  packing  has  already- 
been  emphasized  elsewhere  in  this  chapter.  Tarred  or  oiled 
papers  may  be  used  for  this  purpose.  The  British  generally 
use  hermetically  sealed  zinc  or  tin-lined  cases  to  avoid  ex- 
posing goods  to  rain  or  dampness.  Manufacturers  have  a 
right  to  expect  an  additional  amount  to  cover  the  cost  of  such 
cases,  however. 

Sometimes  cases  lined  with  waterproof  paper,  inside  of 
which  additional  layers  of  ordinary  packing  paper  are  placed* 
are  used.  Manufacturers  also  use  oilcloth  or  taupanlin  but  in 
scmie  countries  a  duty  is  charged  for  oilcloth  which  the  im- 
porter may  not  desire  to  pay. 

Shippers  usually  use  either  excelsior,  straw,  hay  or  waste 
paper  for  stuffing  empty  corners  in  cases.  The  character  of 
this  material  depends,  however,  on  the  nature  of  the  goods 
and  the  route  which  the  shipment  is  to  follow. 

II ow  Machinery  Is 
Packed  for  Shipment 

Machinery  in  transit  must  be  protected  from  water.  A 
covering  of  vaseline  or  grease  on  the  bright  steel  parts  will 
provide  ample  protection.  The  greatest  care  should  be  ex- 
erdsed  in  preparing  machinery  for  shipment  to  foreign  coun 
tries  as  the  effects  of  climate  encountered  in  other  parts  of  the 
world  may  sometimes  prove  disastrous.  The  cases  may  be 
several  weeks  in  reaching  their  destination  during  which  time 
they  may  be  exposed  to  the  rain  as  as  occasional  doses 
of  salt  water.  The  composition  of  the  coating  is  therefore  of 
first  importance;  but  here  again  no  rule  can  be  laid  down,  as 
conditions  vary  so  much.   Crude  gasoline,  white-lead  paint, 


PACKING  FOR  EXPORT 


221 


boiled  oil,  and  tallow  may  be  used.  The  coating,  however, 
must  be  free  from  all  acid  and  capable  of  spreading  evenly. 
It  must  set  quickly  to  a  sufficient  firmness,  and  must  dissolve 
easily  when  wiped  down  with  oil,  turpentine  or  petroleum. 

Essentials  in  Packing 
Goods  for  Exportation 

A  double  check  should  be  made  on  all  goods  entering  cases 
for  packing  for  export.  Unless  this  precaution  is  taken  the 
manufacturer  will  learn  without  much  delay  that  he  is  Reaving 
a  trail  of  disappointed  customers  in  foreign  countries  whose 
chief  complaint  may  be  that  there  is  something  missing  from 
their  origfinal  orders.  In  instances  where  the  shipment  consists 
of  a  number  of  parts  of  one  article,  as  a  machine  for  instance, 
the  greatest  care  is  necessary.  The  machine  must  be  com- 
plete. Every  part  and  accessory  must  be  in  the  packing 
room.  Countershafts,  change  wheels,  spare  pulleys,  belts,  lu- 
bricators, and  spanners  should  be  grouped  alongside  the  ma- 
chine. With  the  aid  of  an  assistant  the  packer  should  care- 
fully check  off  every  item  on  his  packer's  sheet.  The  leaving 
out  of  one  single  part  may  result  in  disappointment,  delay  and 
in  much  correspondence,  not  including  the  additional  ex- 
pense in  later  forwarding  the  missing  parts. 

The  weighing  of  the  contents  of  each  case  before  packing 
is  essential.  This  involves  the  net  weight  of  the  goods,  and 
the  gross  weight  when  packed.  With  the  totals  in  his  pos- 
session the  manufacturer  has  sufficient  proof  against  claims 
that  the  exact  quantity  of  the  goods  as  checked  was  not 
shipped.  Also,  some  countries  require  data  on  the  "legaV* 
weight — ^the  actual  weight  of  the  goods  themselves  with 
their  immediate  containers,  as  well  as  the  gross  weight  of 
the  entire  case. 

Foreign  Requirements  Must 
Be  Met  in  Packing 

The  essential  factors  in  packing  may  be  listed  as  follows: 
Strong  cases,  waterproof  linings,  straps  made  of  strong  mate- 
rial,  and  protection  against  pilfering.  It  has  already  been 
indicated  how  trani^KMtation  facilities,  the  character  of  the 
port  to  which  goods  are  destined,  and  climatic  conditions  are 
determining  factors  in  the  matter  of  intelligently  packing  for 


m  EXPORTING  TO  THE  WORLD 


export.  There  is  still  another  consideration  involved.  What 
kind  of  packing  does  the  man  at  the  other  end  require  in 
Older  to  satisfy  the  customs  r^;ulations  or  any  other  peculiar- 
ities iB  that  rcgicm?  Of  course,  the  manufacturer  should 
know  this.  He  can  obtain  full  instructk>ns  from  his  foreign 
customer.  Once  obtaining  all  the  necessary  information  in 
coimection  with  the  preparation  ol  a  shipment  to  a  foreign 
couatry  he  should  see  ^t  the  customer's  requirements  are 
fully  satisfied.  If  one  method  of  packing  is  much  more  eco* 
nomical  than  another  and  the  customer  requests  the  economi- 
cal method  the  manufacturer  should  see  that  the  buyer's 
wishes  are  considered.  The  following  story  may  illustrate 
the  point :  A  dealer  in  a  Central  American  country  received  a 
shipment  of  tobacco  from  the  United  States  packed  in  zinc- 
lined  cases  instead  of  the  customary  bales.  The  difference 
in  freight  and  duty  amounted  to  $300.  In  the  country  to 
which  the  diipment  was  sent  the  dnty  on  tohacoo  was  the 
gross  wei^^  instead  of  ad  valorem  and  the  packing  cases  had 
to  be  paid  for  at  the  same  rate  as  the  tobacco.  The  fault 
here  lay  in  the  failure  of  the  manufacturer  to  study  the  regu- 
lations of  the  country  to  which  the  goods  were  destined.  Also, 
he  should  have  asked  for  specific  instructions  from  his  buyer 
as  to  Ac  method  of  paddqg,  etc.,  and  the  buyer  should  have 
furnished  them. 

CmuuUSlumld 
Be  CmmHed 

In  shipping  goods  to  foreign  countries  the  manufacturer 
who  has  had  no  experience  in  packing  to  meet  foreign  con- 
ditions should  consult  either  the  Department  of  Commerce, 

the  Pan-American  Union,  or,  if  he  is  a  New  York  manufac- 
turer, he  should  consult  the  consul  of  the  country  to  which 
he  is  shipping  the  goods.  Reliable  information  may  be  ob- 
tained from  these  source^  and  it  may  save  the  shipper  a  great 
deal  of  trouble.  ^ 

In  packing  for  foreign  shipments  the  manufacturer  must 
take  these  additional  matters  into  consideration:  (a)  weights 
and  dimensions  of  cases  or  packages  should  be  reduced  as 
much  as  poseuble  in  order  to  cut  freight  costs:  (b)  cases 
siiould  be  small  and  light  in  order  that  they  may  be  easily 
handled  for  interior  transportation ;  (c)  packages  should  con- 


PACmNG  FOR  EXPORT  «»3 


tain  only  one  class  of  goods  if  possible  as  different  classes  of 

goods  are  subject  to  different  rates  of  duty  in  certain  foreign 
countries;  (d)  advertising  matter  should  not  be  included  with 
goods  in  cases  as  duties  are  imposed  on  such  matter  which 
the  buyer  may  not  desire  to  pay  unless  he  has  requested  it 
from  the  shipper;  (e)  in  countries  where  duty  is  imposed  on 
gross  weight  the  manufacturer  should  make  cases  as  light  as 
possible;  (f)  in  countries  where  some  goods  are  subject  to 
duty  cm  gross  weight  and  some  on  net  weight  goods  subject 
to  the  same  kind  of  duty  should  be  packed  separately,  and  not 
mixed :  (g)  in  other  countries,  however,  mixed  packing  is  al- 
lowed as  long  as  merchandise  has  been  properly  declared. 

Effect  of  Weight  on 
Customs  Duties 

In  some  European  countries  the  dutiable  weight  of  the 
imported  merchandise  is  determined  by  the  rate  of  duty. 
Merchandise  subject  to  a  rate  of  duty  above  a  certain  amount 
is  dutiable  on  actual  or  l^^l  net  weight,  while  merchandise 

subject  to  a  lower  rate  is  dutiable  on  gross  weight.  In  Latin- 
American  countries,  however,  the  basis  for  duty  is  generally 
indicated  in  the  tariff  of  each  item.  It  is  important  to  note 
that  actual  net  weight  means  the  weight  of  the  merchandise 
alone,  without  packing;  l^;al  weight  is  understood  to  mean 
the  gross  weight  less  a  certain  percentage  for  tare,  which  dif- 
fers in  accordance  with  the  container,  and  is  fixed  by  a  sched- 
ule annexed  to  the  tariff.  In  some  countries  the  weight  of  the 
immediate  containers  is  sometimes  included  in  the  dutiable 
weight  of  the  article. 

Articles  of  commercial  value  used  as  containers  may  be 
dutiable  separately  in  some  countries.  French  regulations 
provide  that  articles  imported  as  containers  of  merchandise 
dutiable  on  gross  weight  are  dutiable  separately  only  if  the 
rate  applicable  to  them  exceeds  by  more  tban  10  per  cent  the 
rate  i^plicable  to  the  contents. 

Duty  may  be  reduced  to  a  minimum  if  the  manufacturer  en- 
deavors to  keep  the  weight  of  the  packing  as  low  as  possible 
not  only  for  goods  subject  to  duty  on  legal  net  weight  but 
also  on  goods  subject  to  duty  on  gross  weight. 

It  has  been  suggested  that  a  saving  on  duty  may  be  ef- 
fected by  shipping  the  inner  containers  separately  hem  the 


m  EXPORTING  TO  THE  WORLD 


merchandise  for  which  they  are  intended.  In  some  countries 
the  weight  of  the  goods  akme  is  nsed  as  a  basis  lor  duty 
while  the  inner  containers  shipped  separately  may  be  ad- 
mitted at  a  lower  duty. 

Regnkakmi  m  ComUnes 
Thai  May  AfFect  Packing 

RcgttlaticMis  in  different  countries  affecting  packing  are 
constantly  changing  and  the  wise  manufacturer  will  make  it 
his  duty  to  apply  for  the  latest  information  on  the  subject 
from  the  available  sources  that  have  already  been  mentioned 
in  this  chapter.  As  a  basis  for  determining  the  actual  re- 
quirements»  however,  the  following  information  from  the  prin- 
ce countries  will  prove  of  value  to  those  who  are  making 
iore^n  shipments: 

Argentine— Most  articles  listed  in  the  tariff  dutiable  on 
legal  weight.  Shipment  of  merchandise  of  different  classes  in 
one  case  should  be  avoided  as  customs  authorities  may  apply 
duty  of  highest-taxed  article  in  shipment  to  entire  shipment 

Bolivia— Some  articles  are  dutiable  on  net  weight,  some  on 
gross  weight,  and  some  on  weight  of  merchandise  together 
with  immediate  packing.  As  long  as  mixed  packing  is  not 
intended  to  defraud  customs  there  is  no  penalty  for  such 
packing. 

Brasil—Duty  on  gioss  we^ht,  or  on  legal  net  weight  or 
actaal  net  wdght  may  be  imposed  on  articles  dutiable  by 

weight  Gross  weight  means  weight  of  goods  with  packing, 
except  rough  wooden  containers.  Legal  net  weight  means 
gross  weight  less  tare  allowances.  Actual  net  weight  means 
weight  of  goods  without  any  packing.  Duty  on  actual  net 
weight  is  imposed  on  goods  dutiable  on  1^  net  we^t  and 
actual  net  weight  if  imported  in  same  package.  Packages 
containing  only  merchandise  dutiable  on  net  weight  but  with 
different  tare  allowances  are  subject  to  same  rule.  Weight 
of  packing  is  distributed  proportionately  when  goods  subject 
to  different  duties,  but  dutiable  on  gross  weight;  are  imported 
on  same  package. 

Chile— Merchandise  subject  to  duty  by  weight  may  be  duti- 
able on  net  weight,  gross  weight,  weight  including  packing, 
or  weight  including  containers.  The  customs  tariff  should  be 
consulted  for  further  information. 

Cok»nbia-— Duty  levied  oo  gross  weight,  and  mefthandlse 


PACmNG  FOR  EXPORT 


225 


subject  to  different  rates  of  duty  may  be  packed  in  same  con- 
tainer provided  gross  and  net  weight  of  each  kind  of  mer- 
chandise is  indicated. 

Costa  Rica— Practically  same  regulations  as  Colombia. 

Cuba— Articles  dutiable  on  gross  weight,  actual  net  weight 
or  legal  weight. 

Ecuador — Merchandise  dutiable  either  on  gross  or  net 
weight  Only  requirement  in  packing  in  same  container  mer- 
chandise subject  to  different  rates  is  that  shipper  state  in 
consular  invoice  net  weight  of  each  kind  of  merchandise  as 
well  as  gross  weight  of  entire  package. 

Guatemala — Duty  on  merchandise  may  be  levied  on  net 
weight,  on  weight  including  packing,  except  outer  containers, 
or  on  gross  weight.  Where  goods  dutiable  on  weight  in- 
cluding packing,  imported  loose  in  outer  container,  weight  of 
latter  is  not  included  in  dutiable  weight  When  goods  duti- 
able on  weight  including  packing  are  imported  in  same  re- 
ceptacle with  goods  dutiable  on  gross  weight,  duty  on  latter 
merchandise  levied  on  weight  including  packing  with  addi- 
tion of  one  fourth  thereof,  to  compensate  for  outer  container 
which  is  not  included  in  weighing  merchandise.  Merchandise 
subject  to  different  rates  of  duty  in  same  receptacle  subject 
to  fine. 

Honduras — Merchandise  subject  to  duty  is  dutiable  on 
gross  weight. 

Mexico— Duty  on  merchandise  dutiable  by  weight  is  levied 
on  net,  legal,  or  gross  weight.  No  penalty  imposed  for  mixed 
packing  if  merchandise  is  declared  properly.  This  data  is 
taken  from  provisions  existing  in  normal  times  in  Mexico.  It 
is  subject  to  change. 

Nicaragua — ^Duties  levied  on  gross  weight.  Packing  of 
merchandise  in  one  container  limited  to  10  different  kinds. 

Panama — Imports  dutiable  ad  valorem  and  not  on  weight. 

Paraguay — Argentine  rules  apply  to  Paraguay. 

Peru — Where  articles  are  dutiable  by  weight,  basis  for 
levying  duty  may  be  net  weight,  gross  weight,  or  l^;al  weight. 
When  goods  dutiable  on  gross  weight  are  imported  in  same 
container  with  goods  dutiable  on  different  basis  or  subject 
to  different  rates  of  duty,  or  with  samples  without  value,  25 
per  cent  is  to  be  added  to  weight  of  such  merchandise  weighed 


m  EXPORTING  TO  THE  WORLD 

with  its  immediate  packing  and  its  share  of  the  straw,  atlftV- 
ings,  or  similar  packing  material. 

Salvrndor-^Dtity  is  levied  on  gross  weight  No  objection  to 
mixed  packing  as  long  as  merchandise  is  properly  declared. 

Uruguay — Some  articles  dutiable  on  gross  weight,  some  on 
legal  net  weight  and  in  some  cases  weight  of  inner  receptacle 
is  included  in  dutiable  weight  No  penalty  for  mixed  pack- 
ing. 

Venezuela — Duty  levied  on  gross  weight.  Rate  of  highest 
taxed  article  is  applied  to  entire  shipment  when  articles  sub- 
ject to  different  rates  of  duty  are  imported  in  same  packing. 

EUBOiPB 

Owing  to  unsettled  conditions  in  Europe  only  those  coun- 
tries which  maintained  their  commercial  relations  with  other 
nations  during  the  war  are  indicated  here.  There  have  probably 
been  many  recent  changes  and  the  information  given  bek>w  is 
given  as  a  basis  merely. 

Belgium — Goods  dutiable  either  on  actual  net  weight,  or  a 
tare  allowance  is  made. 

Denmark— Duties  levied  on  net  weight  which  includes 
weight  of  immediate  receptadet  in  which  goods  are  sold  in 
letatl  trade  as  well  as  wrappers  of  paper  or  cloth. 

France — Articles  subject  to  rate  of  less  than  10  francs  per 
100  kilos  (87.6  cents  per  100  pounds)  are,  dutiable  on  gross 
weight;  articles  subject  to  higher  rates  are  dutiable  either  on 
actual  or  l^;al  net  weight 

Italy— Articles  subject  to  rate  not  exceeding  80  lire  per  100 
kilos  ($1.75  per  100  pounds)  dutiable  on  gross  weight;  articles 
subject  to  higher  rates  of  duty  are  dutiable  either  on  actual 
or  Itgsii  net  weight 

Netheriands— Duty  levied  <m  legal  net  weight 

Norway — ^Duty  levied  on  1^1  net  weight,  but  in  some 
cases  only  weight  of  outer  container  is  deducted  from  gross 
weight  while  that  of  immediate  packing  is  included  in  dutiable 
wdfht 

Portugal— Articles  subject  to  rate  not  exceeding  5  rds  per 
kilo  (88.6  cents  per  100  pounds)  dutiable  on  gross  weight; 

articles  subject  to  higher  rates  dutiable  either  on  actual  or 
legal  net  weight 


PACKING  FOR  EXPORT 


827 


Spain— Dutiable  weight  not  determined  by  rate  of  duty. 

Most  articles  dutiable  on  net  weight,  which  includes  weight 
of  immediate  packing  and  containers  in  which  goods  are 

sold  in  retail  triade. 

Sweden— Duty  levied  on  legal  net  weight,  tere  allowance 
being  specified  in  tariff  for  each  item.  In  some  cases  dutiable 
weight  includes  also  weight  of  immediate  containers. 

Switzerland— Duty  levied  on  gross  weight  Where  articles 
are  imported  without  usual  containers  certain  percentage 
added  to  dutiable  weight 

Other  Countries 

Imports  are  usually  subject  to  ad  valorem  rates  of  duty  in 
the  most  important  British  possessions  as  well  as  in  China.  The 
customs  tariff  of  France  applies  to  the  French  colonies.  The 
net  weight  is  taken  as  a  basis  for  the  collection  of  duty  on 
imports  dutiable  by  weight  in  Japan. 

How  cases  for 

Kxport  should  be  marked 

Symbols  instead  of  names  of  customers  in  full  are  used  in 
marking  cases  for  export  The  determining  factors  in  the 
choice  of  symbols  used  are  quick  identification,  abbreviations 
and  secrecy.  Secrecy  is  sometimes  desirable  when  the  manu- 
facturer does  not  wish  to  reveal  the  name  of  the  consignees. 
Quick  identification  is  necessary  in  order  to  avoid  delay  on  the 
docks,  etc,  or  in  the  ship's  cargo.  Only  the  essential  marks 
should  be  used  on  cases  or  packages.  If  old  cases  are  used 
care  should  be  taken  that  the  old  marks  are  removed.  The 
contents  of  a  case  should  not  be  revealed  by  writing  on  the 
outside,  as  this  serves  as  a  tempting  bait  for  thieves. 

The  symbol  of  the  consignee,  the  name  of  the  port,  the 
serial  number  of  the  case,  the  gross  and  the  net  weight  in 
pounds  or  in  kilos  or  in  both,  the  measurement  of  length, 
breadth  and  thickness  of  the  package  in  feet  and  inches  are 
the  essential  marks  on  cases  for  export.  Consignees  often  ar- 
range their  own  symbols  and  they  usually  assume  a  variety 
of  shapes.  The  marks  should  be  legible  so  that  they  will  not 
be  blurred  or  ^Faced  when  the  shipment  reaches  its  final  des- 
tination.  Marks  should  either  be  stenciled,  as  required  in 


m  EXPORTING  TO  THE  WORLD 


making  shipments  to  Chili,  or  painted.  Marks  by  crayon,  tags, 
or  cards  should  not  be  used,  for  obvious  reasons.  Serial  num- 
bers must  be  ghren  to  all  cases.  Duplication  of  numbers  must 
be  avoided  as  the  customs  officials  may  suspect  that  an  at- 
tempt at  fraud  is  being  made.  Neither  should  any  number 
in  a  series  be  overlooked  as  the  consignee  may  suspect  that  a 
case  IS  missing. 

Accuracy  in  the  marking  and  noting  of  the  gross  and  net 
weights  of  cases  so  that  it  will  correspond  with  the  equivalent 
to  the  invoices  and  consular  documents  is  absolutely  essential. 
Consignee's  marks,  also,  should  tally  with  those  in  the  ship- 
ping documents.  Unless  this  precaution  is  taken  the  shipper 
may  hnd  that  he  is  causing  his  customer  considerable  trouble 
as  fiiies,  delays  and  other  inconveniences  are  the  fruits  of  such 
negligence. 

Longshoremen  are  not  easily  persuaded  to  handle  cases  or 
other  packages  with  care  merely  by  such  signs  as  glaring  danger 
marks  such  as  "handle  with  care/'  "glass,"  "keep  in  dry 
place/'  "this  side  up,**  etc  These  phrases  are  generally  use- 
less. The  safe  principle  to  follow  is  to  properly  pack  goods  at 
the  factory,  and  if  there  should  be  a  necessity  for  calling  the 
attention  of  fragile  goods  to  those  who  handle  the  cases 
warning  phrases  in  English  and  in  the  language  of  the  country 
to  which  the  goods  are  destined  should  be  written  carefully 
on  at  least  two  sides  of  the  cases.  In  some  countries  the  gross 
and  net  weight  of  merchandise  must  be  indicated  in  Idlos. 


CHAPTER  XV 


HOW  SHIPMENTS  ARE  MADE 

Method  of  shipping  ooots  from  iNTEaioft— Bdotine  ikvolved 

IN  SHIPMENT— Documents  requirei>— How  bills  of  lading 
AiB  Mia*  OUT— Shipowner's  liability  to  the  shipper— Con- 

SULAB  INVWCES-SpEOAL  KECOT-mONS  IN  VAIHOUS  COUNTRIES. 

The  manufacturer  whose  factory  is  situated  at  some  inland 
point  experiences  more  difficulty  in  shipping  his  goods  to  thk 
foreign  customer  than  the  manufacturer  with  his  plant  at  the 
port  of  embarkation.  The  former  requires  an  agent  at  the 
port  to  attend  to  the  numerous  shipping  details,  while  the 
latter  may  personally  see  that  his  merchandise  is  properly  and 
safely  loaded  into  the  ship. 

Let  us  trace  the  shipment  of  a  manufacturer  from  an  m- 
terior  point  to  its  destination.  How  may  a  manufacturer 
provide  for  the  shipment  of  his  goods  to  the  port  of  embarla- 
tion,  and  what  is  the  process  to  follow  so  that  they  may  be 
safely  placed  on  board  the  ship  for  transportation  to  some 
foreign  port  or,  perhaps,  to  some  inland  point  in  a  foreign 

country?  . . 

He  may  choose  one  of  two  ways.  One  method  is  to  ship  the 
goods  on  a  through  export  bill  of  lading,  and  the  other  is  to 
ship  the  goods  on  a  local  railroad  bill  of  lading  in  care  of  a  for- 
warding agent  or  a  steamship  company,  or  the  manufacturer  s 
own  agent.  When  shipping  goods  on  a  through  export  bill 
ot  lading  the  railroad  company  instructs  its  foreign  freight 
agent  at  the  port  to  engage  ocean  freight  space  on  the  steamer. 
The  foreign  freight  agent  is  supposed  to  attend  to  all  the 
detaiU  in  connection  with  the  placing  of  the  goods  on  board. 
The  more  important  loads  have  foreign  freight  agents  at  the 
principal  ports  whose  functimis  are'  to  handle  these  matters. 

In  shipping  goods  on  a  local  railroad  bill  of  lading,  how- 
ever, the  goods  are  consigned  to  some  specific  person,  such 
as  the  foreign  freight  forwarder,  a  shipping  company  or  the 

229 


2S0 


li.Al'UKTING  TO  THE  WORLD 


manufacturer's  own  representative.  It  is  the  duty  of  the 
consignee  to  engage  freight  space  on  the  steamer  and  to  ar- 

tange  all  other  details  in  connection  with  the  placing  of  the 
merchandise  on  board  the  steamer.  The  railroad's  responsi- 
bility, moreover,  ceases  with  the  delivery  of  the  goods  at  a 
stated  place  at  the  port  It  is  customary  to  send  an  Arrival 
Notice**  to  the  parson  who  is  to  receive  the  shipment  so  that 
he  may  have  ample  time  to  arrange  all  details. 

There  Should  be  no 
Delay  tn  SkipmenU 

It  should  be  remembered  that  a  steamer  usually  calls  at 
several  ports  along  its  route,  and  that  goods  are  loaded  into 
the  hold  of  the  vessel  in  the  order  in  which  they  are  to  be 
unloaded  at  foreign  ports.  For  instance,  a  steamer  makin:; 
its  first  stop  at  Havana,  Cuba,  to  discharge  freight  will  load 
the  merchandise  destined  for  that  port  on  the  last  day  la 
which  freight  is  received  so  that  it  may  be  at  the  top  of  the 
heap.  When  the  steamer  arrives  in  Havana  the  goods  are 
imloaded  without  the  necessity  of  "digging"  into  the  hold 
after  them.  Again,  if  Buenos  Aires  is  the  last  port  of  call  the 
freight  destined  for  that  city  will  be  found  at  the  bottom  of 
the  hold.  It  would  be  necessary,  therefore,  for  merchandise 
intended  for  Buenos  Aires  to  be  sent  to  the  loading  port  on 
the  date  required  by  the  steamship  company  which  may  be 
several  days  before  the  date  of  departure.  Sometimes  freight 
lor  the  first  port  of  call  may  be  received  on  the  day  the 
steamer  is  scheduled  to  leave. 

The  railroads  will  give  full  instructions  regarding  shipments 
for  foreign  destination.  Manufacturers,  especially  those  who 
are  situated  at  inland  points,  can  obtain  all  the  necessary  in* 
fcnrmation  in  ccmaection  with  foreign  shipments  at  the  rail- 
road offices* 

Routine  Involved 
in  Shipment 

If  the  manufacturer  is  to  rely  on  the  foreign  freight  for- 
warder whose  functions  will  be  discussed  later  he  need  not 
bother  about  details  in  connection  with  his  foreign  shipment 


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HOW  SHIPMENTS  ARE  MADE  231 


at  the  port  of  embarkation.  All  that  he  is  required  to  do  in 
this  case  is  to  consign  the  goods  to  the  foreign  freight  for- 
warder with  the  necessary  instructions  and  the  latter  will  do 
the  rest.  If,  on  the  other  hand,  the  manufacturer  is  to  take 
the  entire  responsibiii^— -atich  as  engaging  freight  space, 
preparing  the  shipping  documents,  etc.,— -there  is  a  certain 
routine  that  must  be  followed.   It  is  something  like  this  : 

Inquiry  about  rates  among  the  steamship  companies  operat- 
ing lines  to  the  ports  for  which  shipments  are  intended  must 
be  made  first  of  alL 

When  a  satisfactory  rate  has  been  obtained  freight  space 
must  then  be  engaged.  The  steamship  companies  have  their 
own  individual  rules  regarding  the  booking  of  freight  space. 
Information  must  be  obtained  from  them. 

A  Shipping  Permit  which  instructs  the  receiving  clerk  at 
the  steamship  company's  dock  to  accept  freight  of  the  shipper 
on  a  stated  date  is  delivered  to  the  manufacturer  or  agent 
when  the  freight  space  has  been  obtained. 

The  Shipping  Permit  reads  something  like  this: 

To  the  Receiving  Qerk. 
S.S-  "Imperial" 

PAN-AMERICAN  STEAMSHIP  CO.  WHARF 
Pier  North  River 

RECEIVED  FROIM  Smith  Exporting  Company 
Twelve  (12)  cases  Typewriters 
To  be  delivered  September  18-26 

It  is  to  be  understood  that  this  engagement  is  on  the  con- 
dition that  delivery  shall  be  made  promptly  at  the  time  called 
for  in  this  permit  or  space  will  not  be  reserved,  and  the 
steamer  and  its  agents  shall  be  absolved  from  any  and  all 
liability  arising  out  of  the  issuance  of  or  under  this  permit, 
including  any  liability  that  may  arise  on  account  of  the 
steamer's  proceeding  to  sea  without  the  goods. 

PAN-AMERICAN  STEAMSHIP  COMPANY 

Per  ProForma  

New  York  September  16,  1919. 

A  clause  stating  that  all  risk  of  loss  or  damage  while  goods 
are  on  the  wharf  is  to  be  incurred  by  the  shipper,  etc.,  is 
written  into  the  usual  Shipping  Permit 


232  EXPORTING  TO  THE  WORLD 


Upon  presentation  of  the  Shippings  Permit  at  the  dock  the 
drayman  is  given  a  Dock  Receipt  signed  by  the  receiving 
clerk  which  serves  as  an  acknowledgement  of  the  receipt  of 
the  goods  for  shipment  by  the  steamer.  The  Dock  Receipt 
ccmtains  the  weights  and  measures  of  the  goods  received.  It 
is  customary  for  the  shipper  to  supply  his  own  receipt  forms 
when  several  deliveries  are  to  be  made  to  the  steamer  and 
against  one  Shipping  Permit.  When  all  the  goods  have  been 
delivered  at  the  pier  the  shipper  may  present  these  receipta 
which  have  been  signed  by  the  receiving  clerk  and  obtain 
possession  of  the  Dock  Receipt  which  covers  the  details  of 
each  delivery. 

Having  an  acknowledgement  in  the  form  of  a  Dock  Receipt 
from  tlie  receiving  clerk  tliat  the  goods  have  been  delivered 
the  shipper  is  now  prepared  to  go  through  the  formality  of 
clearing  the  shipment  through  the  custom  house  at  the  port. 
This  must  be  done  before  the  steamship  company  issues  its 
formal  bill  of  lading.  Clearance  involves  the  preparation  of  a 
Shipper's  Export  Declaration  in  which  the  following  informa- 
tion is  written: 

Name  of  steamer ;  destination,  marks  and  numbers  of  pack- 
ages; the  kind  of  goods  contained  in  each;  value,  etc.  The 
description  of  the  goods  must  be  correct  and  if  the  shipper  is 
imable  to  supply  this  specific  information  he  should  consult 
the  official  schedule  of  classification  of  goods  which  may  be 
obtained  from  the  Bureau  of  Foreign  and  Domestic  Com- 
merce. The  information  given  in  the  declaration  muj$t  be  ab- 
solutely correct  as  it  is  from  these  statistics  that  the  govern- 
ments of  the  world  compile  their  reports  on  commerce. 

The  Shipper's  Export  Declaration  must  now  be  attested  by 
either  the  manufacturer  or  some  agent  upon  whom  formal 
authority  has  been  bestowed  for  this  detaiL 

Upon  presentation  of  the  certified  Shipper's  Export  Declara- 
tion, the  Dock  Receipt,  or  other  necessary  papers  including 
the  bill  of  lading,  at  the  steamship  company's  office  the  latter 
will  be  duly  signed  and  turned  over  to  the  shipper.  ■ 

Principles  of  Steamship 
Bin  of  Lading 


A  bill  of  lading  is  a  receipt  for  goods  as  well  as  a  contract 


« 


PAN-ASIAN 
STEAMSHIP  COMPANY 


44  Whitehall 

New  York 


KTWEEN  NEW  YORK  AND  FAR  EASTERN 


\ 


PORTS 


SHimmS   MARKS    A  NUIMNtm 


44809 

Kobe 
•#1/20 


tiianty  (20)  Caa«8  faoe 

Export  License 
#56908 


I 


Export  Declaration 
. #6874863 


Rotlfy  iiltlaate  oozisignee 
Reizo  Matsuoka^ 
Kobe  9  Japan 


90 


MO 


P9r  40e.  ft.. 


if 


4t 


.(g). 


3>er  ton 


Kobe 


in  appArent  food  ord«r  and  eondiUon  from. 


r 


to  be  transported  by  the  good  steamship.^.  .Graaiaxe   :       t(X  3£il  from  the  port  of  NEW  YORK  and  bound  for 

FAM  JBAS7C}AM  POBTB  via  Panama  Canal.  Suer.  Canal  or  Cape  of  Good  Hci]>e»  or  otherwise  'with  liberty  to  substitute  another  steamer*  or  stcanaiers,  or  to  transship  the  goods 
btfort  or  aflCT  the  coauneneement  of  the  'vojrave  by  any  other  tteadMr*  or  steamirib  and  also  with  liberty  to  drydock  with  or  without  cargo  on  board,  to  proceed  to  and  stay  at  any 
porta  or  places  whatsoever,  althouRb  in  a  Contrary  direction  to,  or  cut  of  the  roiitc  to  or  beypnd  the  port  of  discbclrge,  once  or  oftener,  in  any  order,  backwards,  or  forwards,  for  load- 
ing or  discharging  cargo,  coal  and  passengers,  or  for  Any  purpose  whatsoever,  i  nd  all  such  ports;  places  and  sailings  shall  be  deemed  'to  be  included  within  the  intended  voyage  (this 
li  Ml  t9  bt  «QMidu«4     fMrlsUd  Iqp  aay  vordi  la  thii  oootSMl.  whettM  r  vrittcn  qr  pcialidl* 


.being  marked  and  numbered  as  per  margin,  shipper's  weight  (quality^  quantity*  eontent 


marks,  gause,  weight  and  value  unknown),  and  to  be  delivered  subject  to  the  exceptions  aud  conditions  hereinafter  mentioned  in  iik«  apparent  pood  order  and  condition  from  ahip'l 
dtck  (whert  carrj^^^t^onsibility  sbaU  cease)  subject  to  ship's  engagements  not  hereby  disclosed ^^^hrough  altering  the  voyage  or  mvolvtu'g  &  deviation  therefrom*  at  the  port  of 

 -  (or  as  nexir  thereto  as  she  may  safely  get)  unto   --jor  to  h«a  or  their  ***'gTni  Frtisht  for  the  Mid  Cdodi 

to  he  paid  by  the  shippers  in  X^iew  York,  ou  delivery  of  Bills  of  Lading,  in  caijih  without  deducUoo. 

That  the  steamer  shall  have  hbesty  to  sail  wilk  Or  without  pilots,  and  to  deviate  for  tac  purpose  of  saving  life  or jproperty.  that  the  carrier  shall  have  liberty  to  convey  goode  in 
erait  and/or  iightert  to  aixd  from  the  steamer  at  flM  liak  of  the  owners  of  the  goods;  to  transship  the  gooda  to  their  d^ination  by  any  other  •tcamer  or  •teamen  aa  otUu  aa  the  ahip* 


That  the  carrier  shull  not  be  liable  for  loss  or  damage  occasioned  by  perils  of  the  sea  or  other  wat^i^s  aud  dangers  of  navigation  or  whatsoever  kind,  by  collision,  ftrandingt 
jettison  or  wreck ;  or  for  loss  or  damage  due  to  or  caused  by  any  act,  default  or  omission  of  tiie  Administration,  either  of  the  Suez  Canal  or  of  the  Panama  Canal,  or  from  any  inters 
ruption  of  trallie  through  the  Sues  Canal  or  through  the  Panama  Canal,  by  fire  from  any  cause  or  wheresoever  occurring  on  board  in  craft  or  on  shore;  by  barratry  of  the  master  or 
crew ;  by  enemies,  pirates,  robbers  or  thieves,  by  land  or  sea ;  by  theft  by  any  person  on  booard,  in  craft  or  on  tsbore,  whether  in  the  employ  of  the  shipowner  or  not ;  by  err eet  or 
restraint  of  princes,  rulers  or  people;  by  hostilities,  by  riots,  strikes,  or  stoppaKe  of  labor  or  epidemics;  by  explosioa ;  by  bursting  of  boilcra,  or  by  steam,  however  arising;  by  breaks 
down  of  shafting  or  nwchiocry ;  by  defect  in  any  part  of  the  hull,  builcrs.  engines,  machinery  or  appurtenances  of  the  vessel ;  by  unseawortbiucss  of  the  steamer*  whether  existing  at 
time  of  shipment  or  at  the  beginning  of  the  voyage*  provided  the  9wner8  have  -exercised  due  diligence  to  make  the  steamer  seaworthy ;  by  heating,  frost,  decay,  evap<»ation,  smell  or 
t^t  from  or  eontact  with  other  goods;  putr«£Mtioa*  rust,  sweat,*  Wdn  or  spray.  <thange  of  eharaeter*  drainage,  leakage,  breakage,  vermin,  or  by  c:iplo6lon  of  any  of  the  goods,  whether 
shipped  with  or  v.iihout  disciosure  of  liitir  nature,  or  any  loss  or  danaat;e  arising  from  the  nature  of  the  goods  or  the  insuthciency  of  packages  or  inaccuracy  or  obliterations,  errors, 
insuihciency  or  absence  of  murks,  numbers*  address  or  deeeription  of  cargo ;  or  for  land  damage ;  or  for  ri&k  of  ci-aft,  hulk  or  transshipment ;  or  for  any  loss  or  damage  caused  by  the 
pfolaajetton  of  the  voyage ;  and  that  the  carrier  shall  not  be  conchided  as  to  th(  i  eoReetaese  oC  itatemente  horein  of  quality,  quantity,  sauge^  contents,  weight  and  value. 

That  General  Average  Bhall  be  payable  according  to  York-Antwerp  Rules,  1^90,  and  as  to  matters  not  therein  provided  for  according  to  the  usages  of  the  Port  of  New  York. 
Average  Bond  with  values  deciaicd  therein  to  be  signed,  aiiio  sullicient  security  to  be  given  as  required  by  i^laster  or  Agents.  If  the  owners  siiall  have  exercised  due  diligence  to  rr^^^ 
the  steamer  in  all  respects  seaworthy  and  u>  have  her  properly  manned,  equipped  and  supplied,  it  ta  hereby  agreed  that  in  case  of  danger,  damage  or  disaster,  resulting  from  acoi^ 
denta  or  faults  or  errors  in  navigation*  or  in  the  management  of  the  steamer,  oi  from  any  defect  in  the  steamer,  her  machinery  or  appurtenances,  or  from  unseaworthine^^s,  whether 
tzisting  at  the  time  of  shipment  or  at  the  beginning  of  the  voyage  (provided  the  defect  or  the  unsea^^rorthineas  was  not  discoverable  by  the  exercise  of  due  diUgcnce) .  the  shippers'  con- 
signees or  owners  of  ihe  cargo  shall,  neverthelcBs,  pay  salvage,  and  any  special  dharges  incurred  it  wepect  of  the  cargo,  ard  shall  contribute  with  the  shipowner  in  General  Average 
to  the  payment  of  any  uacrihces,  looses  or  expenses  of  a  General  Average  nature  ihat  may  be  made  or  incurred  for  the  common  benetit,  or  to  relieve  the  adventure  from  any  common 
peril,  all  with  tlic  sioue  lorce  and  etfcct,  and  to  the  same  extent*  as  if  such-d&ng4^  diwaga  ar  dlMlMr  had  aol  icnlted  from,  or  h&m  oecaeiOBed  Ivt  aceidente  or  IhutU  or  errors  in 
navigation,  or  in  the  uianagcmcnt  of  the  vessel,  or  any  de.fect  or  unieaworthines&j 

IT  IS  ALSO  MUTUALLY  AGREED  that  this  shipment  is  subject  to  all. terms  and  provisions  of,  and  all  the  exemptions  trom  liability  contained  in 
the  Act  of  Congress  ol  the  United  States,  approved  on  tte  13th  day  of  February,  1893  (aud  entitled,  An  Act  Relating  to  Navigation  of  Vessels,  etc  ), 
aad  nothing  in  this  Bill  of  Lading  shall  operate  to  limit  at  deprive  mt  Shipowner  or  carrier  of  any  Statutory  protection  or  Umitation  of  liability  to 
„t„^.-  i.  ^1  1  *u  J   ^1 — entitled. 


which  he  would,  in  the  abience  ol  the  conditions  and  eaceptumi 

I.-IT  IS  MUTUALLY  AGREED  that  the  value  of  the  goods  receipted 

any  part  a 
had  ad  valorem  freight  paid  thereon. 


ah^m  dog 
^"^■Sief 


doca  not  eju;eed  4«0v  per  frcigiit  ton*  or  in  proportion  for  any  part  of  a 

tedMialB 


vatat  he  axpneely  Mated 


ALSO,  that  the  steamer,  lighter  or  carrier  shall  not  be  liable  for  Articles 
in  iicclion  U6L  of  the  Kevised  Statutes  of  the  United  States,  unless  written 
Uie  true  character  and  value  tliereiAf  is  givea  at  tiie  time  of  lading  and 
ia  tbt  Bik  oC  •  ^ 


S^AliiO,  that  the  shippers  shall  be  liable  for  any  loee  or  damage  to 

cargo,  h;};hter  or  wharf,  caused  by  inUammable,  explosive,  or  dangerous  goods. 
Without  tuil  disclosure  oi  their  naiurc,  wnetbcr  such  shipper  be  Principal  or  Agei 
and  such  goods  oiiay  Lc  thrown  over^ard  or  destroyed  at  any  time  without  comp 
Uoiu  £xtra  charges,  if  any,  fur  discharging.  iisiUerage  or  other  erpeneee  oa 
*t)AM.  dadftred  or  ooBsideMd  oa  enah  hv  ^Mi  ov  mihtanf 
by  shippara  aod/or  eoniigneei. 


4.— ALSO,  that  tiie  carrier  shall  have  a  Hen  on  the  goods  for  all  freights, 
primages  and  charges,  and  also  for  all  fines  or  damages  which  the  steamer,  lightjer 
or  cargo  may  incur  ur  kuUer  by  reason  of  the  incorrect  or  insulBclent  marking,  ni 
herine  or  addressing  of  paekagoK  or  desoription  of  U»eir  contenta,  Biile  of 
■Mitbe  flsade  out  in  aecordaaee  *with  the  preseriptiona  Mid  regnlatloiw  of  Port, 
toms  or  Consular  authorities.  Consular,  Board  of  Health  or  other  certificates  reqi 
to  accompany  the  goods  are  to  be  procured  by  shippers,  and  any  detention,  charg^ 
or  penalties  occurring  to  steamer  or  cargo,  owing  to  the  want  of  eoeh  ecrt^eat 
are  to  be  boraa  hy  tht  ahippaih  aad/or  contlgnaee.  and  the  cargo  to  ba  lehjeet  tol 
Ilea  therefor. 

•.p-ALSO*  that  ia  caM  the  ahlp  ahall  be  prdveated  fay  quaraaUaa  from 
the  goods  at  the  asuaLpl>M  J?'  discharge  or  from  read 
earner  may^iscFarge  the  goodslhto  any  Depot  or  LacarelUH  either 
or  at  any  previooB  or  subsequent  port  at  which  the  ship  callai  and  flnch  disci 
iball  be  deemed  a  liaal  deiiVeiy  aadar  thia  eontract^  and  all  lha 
•arred  on  the  goods  ahall  be  a  Ilea  thoaaa. 


tr'AUBO,  thM  fn  OMO  «ii  war*  boetlllMca  latarrections*  eivU  ooaMBOtlon*  tlrfili 

or  lockouts,  disturbances,  blockade  or  Interdict  of  the  port  of  discharge,  warlike  0t 
naval  operations  or  demonstrations,  whether  at  or  near  the  port  of  discharge 
elaewbere  in  the  courae  of  the  voyage,  or  of  ice  or  closure  by  Im*  or  of  the  happeii* 
lag  of  any  other  matter  of  event,  wheUter  of  like  nature  to  thoae  above  mention^ 
or  otherwlee»  and  whether  existing  or  anticipated,  before  eommcncement  of  or  during 
the  voyage,  which  in  the  judgment  of  the  Master  is  likely  to  result  in  damage  to  or 
Icol  of  the  vessel  or  give  rise  to  xUk  of  captures  ceiture  or  detention  of  veseel  aod/or 
MBMb  or  of  any  part  tt  tha  aaigo^  or  whkh  la  hie  ladlB— t  aay  mOn  It  aaaafe 
ca  iaprndent  for  any  reason  to  proceed  on  or  continue  the  voyage,  or  enter  or  dia- 
charge  cargo  at  the  port  of  discharge,  or  which  in  his  Judwnent  is  likelv  to  give  rice 
to  delay  or  ditJiculty  in  reaching,  discharging  at  or  leaving  the  port  of  discharge,  the 
Maitar  ihaM  be  at  iibcriy,  in  his  discretion*  to  change  ta  aad  proceed  b>-  any  roolc 
dhreet  or  tedircet  or  to  devitae  or  to  proceed  or  rdora  to  or  etop  and  discharge  the 
cargo,  or  any  part,>  thereof,  at  such  other  port  or  ports  as  he  may  consider  safe  or 
advisable,  under  the  circumstances*  and  thereupon  when  so  discharged  the  eazgo  ti^^ 
be  at  the  risk  and  expense  of  the  shippers  and/or  reoeivera  thereof,  and  the  steev 
Owaerc*.  Agents  andMaster  chali  ba  fiaed  aad  dlwbiirgcd  from  aay  taitbtr 

it  hMTCOI* 


T.—ALSO,  that  the  ftoods  are  to  be  received  by  the  "^weiamf  Imnedsstely  tas 
vessel  ia  ready  to  discharge,  and  continuously  at  ail  such  hours  as  the  Custom  House 
or  Port  Authorities  may  give  permission  for  the  ship  to  work,  or  if  necessary,  to 
discharge  into  lighters  at  tbe  risk  and  expense  of  the  Consignee.  And  it  ia  expressly 
understood  that  the  articled  named  in  this  13111  of  Lading  sluUl  be  at  the  risk  of  the 
Owners,  Shipper,  or.  Consignee  thereof  as  soon  as  delivered  from  the  tackle  aad/or 
eeck  of  such  steamer  at  her  port  of  destination,  aud  they  shall  be  received  by  the 
Consignee,  package, by  package  as  so  delivered,  end  if  not  taken  away  the  same  day 
hy  him  they  may  (at  the  option  of  the  Vessel's  Agent)  be  s^t  to  store  or  warehouses 
er  permitted  to  lie  where  landed  at  the  expense  and  risk  of  the  aforesaid  Owner, 
Shipper  or  Consignee,  and  ahall  be  subject  to  a  lien  for  wharfhge,  rent  of  dock*  wharf 
dr  atore  or  any  other  expense  that  njay  be  incurred  in  respect  thereof.  If  on'  the 
arrival  of  the  steamer  at  the  port  of  delivery  any  of  the  bales  or  packages  shipped 
under  the  Bill  Ox  Lading  cannot  be  identihed  by  reason  of  ineufhciency  of  marks, 
obliteration  of  marius,  or  no  marks,  then  in  any  such>  case,  the  Ueceiverf  shall  take 
in  full  discharge*  accord  and  aatisfaction,  any  bales  or  packages  which  may  be  on 
board  the  ateamer  and  be  tendered  there  by  the  Owners  or  their  Agtnts,  notwithstand- 
ing that  such  bales  or  packages  do  not  bear  the  marks  and  description  izidicated  "In 
the  margin  thereof.  The  Collector  of  the  Port  is  hereby  authorized  to  gwmt «  ceneftnl 
order  for  discharging  immediately  after  the  entry  of  the  ship.  ^  * 

.  8*---ALS0,  that  Ui  eaae  any  part  of  the  within  goods  cannot  be  found  durilig 
Ship  s  stay  at  port  of  destination,  they  are,  when  found,  to  be  sent  back  at  the  Mer- 
ehant's  risk  and  Ship's  exbenhe  The  Ship  shall  not  be  liable  for  Incorrect  delivery 
onless  such  packages  ahaU  have  been  distinctly  and  permanently  marked  by  the  Shin- 

tpee  befo^  shipment  with  the  name  of  the  port  of  destination.  Goods  overcarried  to 
e  returned  to  Consignee  at  Ship's  expense,  but  free  from  Uability  for  any  JoMi  da> 
reeiaU<m  or  toiage  aitisiag  from  overcarriage  or  frota  return  carriftgeT^ 

k»-  "'*^'^^l^]?®fT»^e^ft^  for  short  ddivfery  ofTor  damage  eargo 

being  made,  the  Garner  shaU  not  be  hSble  for  uiore  tiisa  the  net  Invoice  priie^S 
freight  and  insurance  less  all  charges  saved,  and  any  loss  or  damaae  for  wU^  tfm 
OwKfar  aaay  be  liable  ahall  be  adjoated  pro  rata  oa  the  said  baaliu 

Neither  the  Carrier,  the  Vessel,  nor  the  Agents  shall  be  liable  for  anv 

damage  to  goods  in  any  event  unless  notko  fa,  writing  of  the  da^ 
ShaU  have  been  presented  to  the  Ship's  Agents  at  the  pert  of  diaSiwir?  bSL«  S 
l^val^df  tha  cooda  taa  tha  fihip'a  custody.  ^mk^JTSu^^SS^^^^ 

u^^t^'  ^  merchandise  on  wharf  or  in  lighter  or  other  craft  shall  be  at 
ilcrchandisc  Owner's  risk  of  loss  or  damage  in  every  case  and  partleolarmlan 
shall  be  proven  that  such  loss  or  damage  baa  been  caused  tav 
lid  tht  Omicr  er  Us  servants*  -^•-•••••w 

s  ^ut^^rr^^'  ^       Shippew  are  hereby  notified  that  this  and  all 
of  this  Line  carry  general  cargo  for  all  torts.  Including  kerosene  oil  and  nrodn^ 
of  petroleum,  spirits  of  tujpentine,  aU  kinds  of  chemical  products  «id  lloiSda  to^S 
t^'u^'^      packages,  and  it  is  agreed- that  8team«  and  wi^^ 

SSSL'i^'LS  £i«««!u!?Jfe.^^u«^  resulting  f?^  cSSla  «  tSSLSS 
Vila*  or  pMsinAtj  to*  or  tbaclieet  of  other  cargo  on  board.    ""•■•^  ^ 

Glasa.  CMna*  Castings  and  other  goods„of  _a_.bzittiA_aad 


steamers 


TBANSSIllPMENT  CLAUSE:— Transhipment  of  aaiio  for  ports  where  t* 
an  conditions,  stipulations  aad  asceptions  in  tha  cQstoaaaiy  form  of  bill  of  ladir 
transit.  Tha  shipowner  is  not*  and  sbaB  not  be  deemed  to  be  the  agent  for  such 
delay  in  regard  to  the  goods  after  they  shall  have  left  the  steAmship's  tackle  and/f 
practicable*  but  tlie  shipowner  shall  not  be  liable  for  detention  and  the  risks  and 

TIlStmiN  AMD  SHANOHAl  OABGO  may  be  Ughteied  from  below  the  ba 

MANILA  AN  D  TUILIPPINB  l*OIITS  CABGO— In  accordance  with  the  i 
'consignee's  risk  and  cxponce,  from  the  steaaier  to  the  Custom  House  wharf*  aad  IA 
such  deliveiy  shall  constitute  a  full  diseharge  of  the  carrier^s  obUgatloo.  nadcr  iMs 
bg  the  Customs  authoritic*  or  employees*  wben  the  iropds  were  delivered  into  their 
shortage,  loes  or  mlsddlvary  of,  or  any  damage  to  eargo*  shall  be  presented  by  tl 
asmpietion  of  tha  dlsihaiit  ad  the  vasssll  and  la  Mtalk  «C  laih  aslls^  Ito  afidta 
Habk  therefor.  '  — 

FUPAID  FBEIOHT  Is  to  bt  iBBslilfli 
latarruptlon  or  abandonment  of  the  voyage  at  a 
the  cost  of  forwarding  shall  be  payable  by  the 


frngde  nature  or  unprotected  pieces  are  carried  at  Skipper**  rislf  hLtm't*^  rt»i».r 

not  to  be  held  responsible  for  any  breakage  of  or  injunr  thoSST  ••eww 
f^?                   *  ^  shipowner's  purposed,  is  to  be  at  the  shipowner's  expense 
freight  notr  In  nao  at  the  time  of  the  transhipment  by  the  carrier  or  oirriS? 


and  snbjeet  to 
or  carriers  completing  tfM 
'^r  any  loss,  damage  or 
forwarded  as 
their  consignees. 


'PTSStSs'^^Slhte^aSr^^^^  5?  twS^o'Tr'lJ'pfr^Wid^^ 

Owners  or  Consignees  of  the  goods  tnd  shaU  constitute  a  Uen  on  toe  goods.        wrvaiaea  Pf  ^mmta  of  the  i 


or  if  there  be  a  forced 
same  Line,  or  otherwise^ 


iditions,  whether  written  or  printed*  as  fully  as  if  they 
uLL^"* ^™BBi(>F,  tSMaBtor  cr  Agent  oi 


PREPAID 
★ 


In  accepting  this  Dill  of  Lading,  the  shipper,  owner  and  consignee  of  the  go^  and  the  bolder  of  tho  BIB      lliiSfn*  mctma  4^/,  Kii  %^^a  v     n       ^.    .  . 
'^^SSI^:!ii!^^''^:^^JS*^^  «       were  aU  siiSd  by  sudi  dCper.  hlS^  ^  stlpuJationf.  ezeeptioBS  and 

-  saia  aup  hftth  afflnned  tojlMc  iMIto  of 

Ran-Asian  Steamship  Cbmpany 

Agents  for  Masters 


DaUd  In  New  York,  this  ...^  of  i^fll^?".?.^*... . .......   i$..19 

'  hr  «  la  behalf  of  any  government,  whether  prior  to  or  subsequent  fb  » 


•s  opened  at^/ar   

wlln  any  orders  or  dbaetlcns  as  to  employment,  departure,  arrival,  routes^  ports  of  call,  stoppages. 


The  ship  Shan  act  be  re^onslble  for 

•The  ship  shall  have  Bberty  to  _ 

subject  whatsoever  given  by  any  GovemiAt.  or  any  department  thereof,  or  any  person  acting' or  purporting  'to  act* wlt^ thVauthMity'of "a^^ 
thereof,  or  by  any  committee  or  persons Kying  under  the  terms  of  a  war  risk  insurance  (if  any)  the  right  to  give  such  orders  or  directions  and.  if 

S2  ^^tl.I?2!l^':f^l!•;'«^^!52'*"ft  Sr?SlL*l^»-"*  ""At  "SSu?^  •  de?iatlon,*or  ^  defauH.  and  shan  not  giv 

SSi.  nr  *iTr?fyt^.^*fr;gr,yi":^i?L'*--'^^  *  ^^"^  *»»*J?«Li?***  notwithstanding  anything  to  the  contrary  contained  herein,  the  ship 

SmS?  ^y..j!'™y-*^»!?*-ui,»'^^'  ®I  «W.W>>y?  y*d  may  discharge  the  whole  or  part  of  the  cargo  at 

where  ship  s  responsibility  shall  cease,  or  taagr  tmasblp  at  any  ilaot  tf  the  vcfnos  tta  whde  ar  gaft  cf  tha  saiaa  lato  aar  athsr  veesel  Ibrcarrt 
or  to  any  other  port  or  place  whatsoever,**  "  ""^  ▼•ww  wr 

I?  S*^  ft?  ■i'**  ^  Uber^to  proceed  via  any  route  to  deallaatlon.  and  to  deviali  fkam  ar  chaaga  tha  advertised,  ar  I 

^    yTrimTi  y*rif  fi  Il7^  hi  Kit  er  la  Pii  tola  eg  iwhi  el  «vpwtb  iMt  iT  iiriir7,.T  iT^    J  JlL^Lt  ^ . 


Ku^nt 

nuijitions,  or  to  any  other 
Lent,  or  of  any  department 
Reason  of  aad  in  compliance 
to  any  Uability  on  the 
In  pursuance  of  advices, 
|?ort  or  place  whatsoever* 
tha  poci  of  desUnatloa 

led  roote  at  any  time  or 
rev  Si  the 


PRO  FORMA 


Sti:."T-h-p  r.ill  of  Lading.  I  ron,  three  to  eleven  copies  are  required  under  different  circumstances.  Three  sipned  copies  constitute  a  nepotiahle  "full  set."  Should  be  inr 
Tl*i>  Uill  oi  lading  has  been  drawn  "to  order"  with  the  "notify"  clause.    It  is  endor^d  in  blank  by  the  shippers.    When  a  Bill  of  Lading  is  drawn  directly  in  the  name  ■ 


ou  back  by  shipper.  There  are  many  forms  of  Ocean  Bill  of  Lading. 
)rcign  consignee  no  endorsement  by  shippers  is  necessary. 


HOW  SHIPMENTS  ARE  MADE 


to  carry  them.  It  is  negotiable.  When  drawn  to  a  shipper's 
own  order  or  to  a  consignee  it  conveys  ownership  in  the 
goods  it  represents.  Hence,  it  requires  the  endorsement  of  a 
person  in  authority.  The  signature  of  a  clerk  is  not  sufficient. 

Bills  of  Lading  are  furnished  by  the  steamship  companies 
without  charge  usually.  They  are  made  out  by  the  shippers, 
rilie  number  of  copies  that  the  shipper  is  required  to  prepare 
depends  on  the  number  he  needs  for  his  own  purposes,  and 
the  number  Xhe  steamship  company  and  consular  office  may 
require. 

Not  all  steamship  bills  of  lading  furnished  by  the  shipper 
are  negotiable,  however.  Only  the  signed  copies,  usually  two 
or  three  in  number,  are  negotiable  and  these  constitute  what 
is  called  a  "full  set."  Banks  through  which  the  customary 
documents  are  to  pass  generally  require  a  full  set  of  steam- 
ship bills  of  lading.  Unless  the  bank  has  all  these  documents 
in  its  possession  it  has  not  the  necessary  title  to  the  goods 
involved.  A  single  bill  of  lading — negotiable — not  in  the  pos- 
session of  the  bank  eliminates  the  latter's  security  in  the 
goods. 

The  non-negotiable  copies  of  the  bill  of  lading  may  be  used 
for  the  manufacturer's  files  or  for  the  customer  abroad.  The 
steamship  company  will  require  at  least  one  copy.  The  con- 
sular offices  must  be  supplied  with  at  least  one  copy  as  well. 

When  Title  to  Goods 
Is  Transferred 

Unless  the  consignee  has  paid  cash  in  advance,  or  has 
furnished  security  of  some  kind  to  justify  the  transfer  of 
an  open  account  the  bill  of  lading  will  not  be  made  out  di- 
rectly to  the  foreign  customer.  No  experienced  exporter  is 
willing  to  give  an  importer  title  to  the  goods  unless  the  latter 
has  either  made  a  settlement  before  the  goods  are  shipped  or 
funiished  security  of  some  kind  to  justify  the  transfer  of 
title.  When  the  shipper  desires  to  ship  the  goods  but  retain 
title  he  makes  the  bill  of  lading  out  "to  order."  Not  until  the 
shipper  endorses  the  bill  of  lading  drawn  after  this  fashion 
does  title  pass  from  one  person  to  the  other.  Neither  can  any 
one  obtain  possession  of  these  goods  unless  the  bill  of  lading 
is  properly  endorsed  by  the  shipper. 


tU  EXPORTING  TO  THE  WORLD 


It  is  permissible  to  insert  a  "Notify"  clause  on  the  margin 
of  the  bill  of  lading-  authorizing  the  steamship  agents  to  notify 
the  consignee  of  the  arrival  of  the  goods  at  the  port  of  desti- 
nation. The  "Notify"  clause  simply  reads:  "Notify  Smith 
and  Co."  or  who  ever  happens  to  be  the  consignee.  Title, 
however,  is  not  transferred  until  the  consignee  is  able  to  pro- 
duce a  properly  endorsed  bill  of  lading  which  he  may  have 
obtained  from  the  bank  after  a  satisfactory  disposal  of  the 
draft  has  been  made.  Or,  he  may  have  obtained  a  properly 
endorsed  bill  from  the  shipper  himself. 

If  the  bill  of  lading  is  drawn  to  the  order  of  the  shipper 
then  the  latter  must  endorse  it  before  title  to  the  goods  can 
be  transferred.  If  the  bill  is  drawn  to  the  order  of  the  con- 
signee the  latter  may  obtain  possession  of  the  goods  upon 
endorsing  it  The  shipper's  endorsement  in  this  case  is  not 
necessary.  The  formality  of  endorsement  is  necessary  in  the 
"full  set"  of  bUls  of  lading. 

Haw  BUls  of  Lading 
May  Be  Endorsed 

Bills  of  lading  may  be  endorsed  either  "specially"  or  "gen- 
erally." When  endorsed  "generally"  the  person  in  possession 
of  the  document  is  entitled  to  the  goods.  If  the  person  claim- 
ing the  goods  is  onable  to  produce  a  properly  drawn  bill  of 
lading  he  may  furnish  a  bond  to  the  steamship  company  to 
protect  it  against  any  claims  that  might  arise  through  the 
appearance  of  the  rightful  owner.  It  is  not  very  often  that 
occurrences  like  this  are  recorded,  but  in  order  to  avoid  any 
such  situations  the  shipper  should  be  very  careful  about  hU 
bills  of  lading.  He  should  see  that  they  arc  properly  endorsed 
and  directed  to  the  proper  persons. 

Hozv  Bills  of  Lading 
Are  Made  Out 

There  arc  no  uniform  bills  of  lading.  They  vary  in  size, 
shape  and  color.  The  clauses  contained  therein  are  generally 
alike  although  in  some  instances  there  appear  slight  modifica- 
tions in  order  to  comply  with  conditions  or  customs  ia  certain 
countries.  Some  of  these  clauses  protect  th^  steamship  com- 


liODBL  OF  INVOICE  WHICH  MUST  fiS  FILED  WITH  GENERAL  CONSULAiTE  OF  CHILE  IN  UNITED  STATES 


4 


No 


CoNSULADo  General  de  Chile  en  Los  Estados  Unioos. 


^anttm  de  la$  mertadertoB  dapadiadoM  por  THE  REMIM 

OKVOICB  OW  nmtCHAMDISS  SmPffSD  BY) 

en  Nueva  York  abordo  del  vapor  

(IN  NBW  YDIUC  ABOARD  TH8  8TBAMBR) 

jNMilo  de„»  .VALPARAISO.  CHILE    .  


iOBMBRAL  CONSULATB  OF  CUILB  IN  TUB  ONITBD  STATBS) 

NtMM  Yoi*,  EL  as  PE  ABBH  OF 

HIP.  CABTBinfiE  COMPANY^  INC. 


xon  destino  al 

(DESTINBD  POR  TUB  FORT  OF) 


8ANTIA60  CHILE 


ie^ 

fvdor  total  de  la  mercaderia 


a  coim&uuAon  de  fit  8TEVFWS0W  &  CO 

(TO  THB  CONSIGNMBNT  OF) 


pwcmntade. 


OK>B  ACGOIINT  Of) 


Xim  8TFVFN«SnN  h  CO 


CVOTAL  VAI^DB  OF  THB  MBRCHAND] 


joio  oiMticaiio 

(AMBUCAN  OOUI 


NUMBSOS 

(liUHbMi) 


VALPARAISO 


BULTOS 

CtASB 

00NT8NIDO 

1           PESO  TOTAL  EM  KILOS 
1                (Total  ^veight  in  Kilograms) 

VALOR  TOTAL  DC  OAOA 

(FMfa«W)  I 

(CiMt) 

NBTO       H  BRim> 

1         ^INKb^^^          II  ^^9hp00B) 

ITEM  DE  MERCADERIA 
(Total  valae  ol  mc3k  UmM 

#100/1(J. 


6 


CAJAS 


CAJAS 


SUMA 
(TOTAL) 


CAJAS 


CARTUCHOS  CARGADOS  PARA 
REVOLVCRES* 
10000.-  CALIBRE  52. 
10000.-  CALIBRE  38* 

CARTUCHOS  CAR6AD0S  PARA 
ESCOPETAS. 
8000.-  16  GAUGE. 
8000.-  12  GAUGE. 

ARUMS  OE  FUEGO. 

20  RIFLES  CALIBRE  22. 
20  E8C0PETA8  12  GAUGE. 


223.45 


739.20 


241.26 


820.78 


THE  IemiNGTON 


N  METAILIC  CARTRIDGE  COMPAMY  IH 


SOMA 
(TOTAL) 


206.78 


264.84 


2 
u 

I: 
s 

< 

fa 
O 

u 

< 
> 


s 

OB 

D 

as 
s 

i 


Consular  Invoice,  Chilian  form.   All  shipments  to  Chile  must  be  accompanied  by  Consular  Invoice. 


HOW  SHIPMENTS  ARE  MADE 


pany  against  claims  on  the  order  and  condition  in  which  goods 
were  shipped.  Therefore,  the  clause  reading  "Shipped  in 
good  order  and  condition"  applies  only  to  the  external  con- 
dition of  the  cases  or  packages.  Steamship  companies  are 
not  presumed  to  know  the  condition  of  the  goods  within  their 
cases,  according  to  court  decisions  the  world  over. 

The  clause  "quality,  quantity,  gauge,  contents,  weight  and 
value  unknown"  is  aimed  to  protect  the  steamship  company 
against  claims  involved  in  the  descriptions  cited.  However, 
the  steamship  company  may  be  held  responsible  for  damage 
to  goods  when  such  damage  is  not  covered  in  the  bill  of 
lading  clauses.   For  self  protection,  therefore,  it  is  very  care- 
ful in  the  matter  of  receiving  goods  in  damaged  case  s  or 
packages.   When  such  packages  have  been  received  a  nota- 
tion is  made  on  the  dock  receipt  as  well  as  on  the  bill  of 
lading.   When  this  condition  is  reported  on  the  bill  of  lading 
it  becomes  known  as  a  "foul"  bill.   Bankers  frown  on  "foul" 
bills  because  they  are  always  susceptible  to  claims  at  the 
other  end.  Shippers  should  be  very  careful  against  permitting 
damaged  packages  to  be  sent    Instructions  should  be  left 
with  the  receiving  clerks  to  advise  them  whenever  broken 
cases  arrive  at  the  dock  so  that  they  may  be  replaced  and  a 
"clean"  bill  of  lading  obtained.     Sometimes,  however,  the 
steamship  company  may  be  induced  to  issue  a  *'clean"  bill 
even  though  it  has  received  a  number  of  cases  or  packages  in 
a  damaged  condition.  The  steamship  company  in  this  case  win 
require  a  "letter  of  indemnity"  from  the  shipper,  however,  which 
shall  protect  the  former  against  losses  arising  from  claims  at  the 
port  of  destination.   If  these  claims  arise  the  steamship  com- 
pany will  settle  and  later  recover  from  the  shipper.  Letters 
of  indemnity  are  attached  to  the  steamship  company's  biU  of 
lading. 

The  Shipowner's  Liability 
to  the  Shipper 

The  shipowner  must  see  that  the  ship  is  seaworthy  at  the 

beginning  of  the  voyage.  It  must  be  free  from  defects  of  any 
kind.  If  an  accident  occurs  on  the  high  seas  and  it  is  due  to 
a  defect  that  existed  before  the  steamer  left  port  the  ship- 
owner will  be  liable  for  all  damage  to  merchandise.  If,  how- 


23G 


EXPORTING  TO  THE  WORLD 


ever,  an  accident  occurs  after  the  ship  leaves  port,  and  was 
not  due  to  some  defect  that  existed  before  the  ship  left  port, 
the  shipowner  is  free  from  liability. 

Suse  of  Packages 
Required  in  Shipment 

Some  steamship  companies  issue  Parcel  Receipts  to  cover 
packages  of  a  limited  size  and  of  small  value.  These  command 
a  very  small  freight  rate.   The  feature  of  these  Parcel  Re- 
ceipts  lies  m  the  opportunity  that  the  consignee  has  of  ex- 
amining and  showing  samples  of  goods  shipped  by  the  same 
vessel  on  regular  bills  of  lading.    Consignees  are  often  able 
to  sell  their  stock  from  the  samples  while  the  cargo  is  still 
being  unloaded.    Parcels  having  a  small  value  may  also  be 
shipped  under  a  Parcel  Receipt  although  restrictions  as  to  size 
and  value  are  made  by  the  steamship  companies.  Packages 
measuring  more  than  3  to  5  feet  will  rarely  be  accepted. 
Neither  shall  they  be  valued  at  more  than  $50.    Parcel  Re- 
ceipts, moreover,  do  not  cover  the  steamship  company  with  as 
much  responsibility  as  the  bill  of  lading. 

Consular  Invoice 
in  Foreign  Trade 


A  consular  invoice,  r^rded  by  many  manufacturers  and 
exporters  as  a  nuisance,  is  a  document  in  which  the  details  of 
an  invoice  must  be  accurately  stated,  and  presented  and  sworn 
to  by  the  shipper  or  his  representative  in  the  consulate  of  the 
cDimtry  to  which  the  goods  are  to  be  sent.   All  the  inq)ortant 
foreign  countries  maintain  consulates  in  the  principal  Ameri- 
can ports.   Some  consulates  require  two  copies,  others  five 
or  six  or  eight.    It  depends  on  the  regulations  of  each  in- 
dividual country.    Consular  invoices  may  be  obtained  at  the 
consular  offices  for  a  nominal  price.    Each  country  has  its 
own  regulations  in  connection  with  the  charges  made  for 
certifying  consular  documents.    Consular  invoices  arc  re- 
quired for  large  shipments  only  and  not  for  parcel  post  pack- 
ages, excepting  in  the  case  of  one  or  two  Latin  American 
countries. 

The  lack  of  uniformity  vat  consular  regulations  affecting 


236 


EXPORTING  TO  THE  WORLD 


ever,  an  accident  occurs  after  the  ship  leaves  port,  and  was 
not  due  to  some  defect  that  existed  before  the  ship  left  port, 
the  shipowner  is  free  from  liability. 

StMe  of  Packages 

Required  in  Shipment 

Some  steamship  companies  issue  Parcel  Receipts  to  cover 
packages  of  a  limited  size  and  of  small  value.  These  command 
a  very  small  freight  rate.  The  feature  of  these  Parcel  Re- 
ceipts lies  in  the  opportunity  that  the  consignee  has  of  ex- 
amining- and  showing-  samples  of  goods  shipped  by  the  same 
vessel  on  regular  bills  of  lading.  Consignees  are  often  able 
to  sell  their  stock  from  the  samples  while  the  cargo  is  still 
being  unloaded.  Parcels  having  a  small  value  may  also  be 
shipped  under  a  Parcel  Receipt  although  restrictions  as  to  size 
and  value  are  made  by  the  steamship  companies.  Packages 
measuring  more  than  3  to  5  feet  will  rarely  be  accepted. 
Neither  shall  they  be  valued  at  more  than  $50.  Parcel  Re- 
ceipts, moreover,  do  not  cover  the  steamship  company  with  as 
much  responsibility  as  the  bill  of  lading. 

* 

Consular  Invoice 
itt  Foreign  Trade 

A  consular  invoice,  r^rded  by  many  manufacturers  and 

exporters  as  a  nuisance,  is  a  document  in  which  the  details  of 
an  invoice  must  be  accurately  stated,  and  presented  and  sworn 
to  by  the  shipper  or  his  representative  in  the  consulate  of  the 
country  to  which  the  goods  are  to  be  sent  All  the  in^rtant 
foreign  countries  maintain  consulates  in  the  principal  Ameri- 
can ports.  Some  consulates  require  two  copies,  others  five 
or  six  or  eight.  It  depends  on  the  regulations  of  each  in- 
dividual country.  Consular  invoices  may  be  obtained  at  the 
consular  offices  for  a  nominal  price.  Each  country  has  its 
own  r^^lations  in  connection  with  the  charges  made  for 
certifying  consular  documents.  Consular  invoices  are  re- 
quired for  large  shipments  only  and  not  for  parcel  post  pack- 
ages, excepting  in  the  case  of  one  or  two  Latin  American 
countries. 

The  lack  of  uniformity  in^  consular  regulatkms  affecting 


9-uasM  Mkmu 


RepuUica  del  Ecuador 


Factan  PiMnAr  a.  U  m.«.»A^  q...  po,        A  LOS  .Sr  ES  THE  6E0  L  SQUIER  MF6  COMPANY 


A.  NUEVA  YORK  ClUDAD 


01  «  L      Sr.   g  VifiNQLD 


..del  puerto  de 


GUAYAQUIL 


Iv^  M  VAPOR  "  ADVANCE 


^^yj^^^u  ^^^^  9 

■iwi  su  Liapitan 


procedente  de  New  York,  con  destino  a     GUAYAQUIL  ECUADOR 


cuyo  valor  es  de  $  49?  >35  ,  equivalentes  a  5y.     98i^«50  ^        gu^re  igual  a  $0.50. 


NUIUSOS 

BULTOS 

tUSE 

CONTENIOO 

Peso  Bruto 

wKUograBK 

Peso  Neto 

•8  KiiQirUMS 

VALOR 

«  (Mint 

B 
V 

1/2-1 1/12 

\ 

CAJAS 

MAQUINAS  PARA  U  INOUSTRIA 

710 

52U^ 

25 

GUAYAQUIL 

TOTAL 

it 

CAJAS 

710 

524  \ 

25 

N^Yi^20  DE  MAYO  DE  iQi  9 


QinfrAAcrito  Contul  Gonfind  do  1a  RopuMira  del  F-^ii**!**** 
certifica  la  factom  pncedente  da — L JLJ — Boitos  con  el  peso 
Ja  (  7iP  ) — Kilaawflnofc  pratawta J«  aa  S  ai< 


CO  A6ENTES 


MAY  2  2 1919- 


Consular  Xnvoicc,  Ecuaderian  form.  While  Consular  invoices  are  required  for  nearly  Ul  Latin- American  countries  there  is  a  distinction 
the  method  of  drawing  ui>  Consular  Invoices  as  an  examination  ol  the  Chilian  and  Ecuaderian  forms  will  indicate. 


LEY  DE  ADUAXA 

AsT.  67. — Cuando  los  Administradores  de  Aduanas  observaren  <^ue  el  valor 
lal  de  tes  mercaderias  entuneradas  en  la  factura  consular  es  evidentemeBte 
ina>'or  que  el  declarado  en  ella,  pondriui  este  hecho  inmediatamente  en  conoci- 
miento  del  Jurado  de  Aduanas,  para  que  este,  plenamente  comprobado  el 
hecho,  y  ccn  audicncia  del  interesado  imponga  como  pcna  el  quintuplo  de  la 
cantidiad  que,  per  efecto  de  la  falsa  declaracion,  se  pretendio  defraudar  per 
dtfcchos  de  certificadon^  £1  valor  que  se  ddie  dedarar  es  el  de  la  mercad^ia 
CB  d  faigar  deorigm. 

Los  Consoles  qne,  al  certificar  ana  factura  encontraren  notable  diferencia 
entre  el 'valor  respective  y  el  declarado,  liaran  prcsente  tal  circunstancia  al 
cmbarcador;  y  si  este  insistiere  en  el  despaclio,  certificaran  la  factura,  y,  por 
el  correo  inmediato  prevendran  de  lo  ocurrido  al  Administrador  de  la  Aduana 
correspoodiente  al  puerto  hacia  el  cna1-va  dirigido  el  cargamento  "Ea  caso  de 
litigio  entre  el  vendedor  y  el  importador  aquel  no  podra  demandar  a  este  sino 
por  el  valor  declarado  en  la  factura  consular. 

Art.  71. — Si  al  recibir  el  importador  la  factura  consular  encontrare  algun 
error  en  las  dcclaraciones  o  pesos  que  puedan  ocasionarle  pcnas  podra  evitarlas 
piewtando  el  Gobeemador  de  la  Frovinda,  dentro  de  los  primeros  sds  dSas 
habilcs  de  haber  Uegado  el  cargamento,  una  solicitud  por  triplicado  indicando 
tales  crrores  y  pidiendo  que  aotorice  el  reconodmiento  previo  de  los  bultos  que 
nccesitcn  este  requisito. 

El  Gobemador,  hara  dejar  copia  de  ella,  certificada  por  su  secretario.  en 
un  libro  que  para  el  efecto  se  llevara  en  la  Gobernacion  y  decretara  al  pie  de 
dicha  soiicitiid  que  se  proceda  al  reconodmiento  de  las  mercaderias,  ordenando 
que  wm  ejeoqdar  se  remita  al  Ministerio  de  Hacienda,  otro  al  Administrador  de 
Aduana  y  que  el  tercero  se  devuelva  al  solkitante,  a  mas  tardar  al  dia  sitfuiente 
de  su  presentacion. 

£1  Administrador  hara  reconocer  los  bultos  respectivos  en  presencia  suya, 
del  Intcrvcntor  y  de  un  Vista  que  designara  para  cada  caso,  y  firmari  con  estos 
d  leumocjinicnto  por  triplicado.  Uno  de  los  ejcmplares  quedara  cn  poder  del 
Intcrvcntor  otro  lo  enviara  el  Administrador  al  Ministerio  de  Hacienda  y  el 
tcrcero  se  entregara  al  importador  para  que  lo  acompafie  a  su  pcdido,  que  debe 
scr  igual  rcconocimiento,  pedido  que  el  Administrador  ordenara  sea  despachado 
por  otro  Vista  Si  del  reconociniiento  restdtare  qu^  no  hubo  tal  error  en  la  factura 
consohr,  o  que  las  dcclaraciones  o  pesos  estuvieren  con  formes  a  lo  declarado  en 
cUa,  se  cobrara  al  interesado  un  rccargo  de  10%  sobre  los  deicdios  del  bttltO-O 
kaltos  que  motivaron  la  tramitacion  anterior. 

Para  el  rcconocimiento  expresado  en  este  articulo  la  aduana  cobrara:  5 
ccntavos  por  cada  bulto  del  mismo  contenido,  cuando  estos  scan  de  tal  natnr- 
alea  qpe  ao  fncre  necesario  abrirlos  para  sab^r  su  contenido  o  cuando  el  peso 
total  &  una  partida  se  puede  verificar  pesando  una  parte  de  ellos ;  20  centavos 
por  cada  bulto,  cuando  siendo  del  mismo  contenido,  sea  preciso  reconocer  y 
pesar  cada  uno,  un  sucre  por  bulto,  cuando  scan  de  diverso  contenido. 

Akt.  72. — Cuando  un  comerciante  no  pudiese  manifestar  por  menor  sus 
mercaderias,  por  &lta  de  factura  o  conodmiento  del  contenido  de  lot  1ioltos» 
podra  pedir  al  Adm^istrador,  dentro  del  terauno  de  120  dias,  contados  desde  la 
llegada  del  buque,  que  el  interventor  y  un  Vista  formen  la  factura  mediante 
d  pago  de  cinco  a  cien  sucres ;  remuncracion  que  senalara  el  Administrador  segun 
la  importanda  del  trabajo.  £1  Administrador  hara  despachar  los  bultos  asi 
factmados  con  an  Vista  distinto  del  que  fdnii6  la  factnra,  la  que  no  destmye 
la  lKtu«-a  consular.  Si  al  llegar  esta  se  encontrare  diferenda  entre  lo  que  con- 
tenian  los  bultos  y  lo  declarado  en  la  factuar  constilar,  se  cobrari  un  25%  da 
ffccargo  y  para  el  efecto,  la  solicitud  debe  ser  garantizada. 

Art.  108. — En  los  articulos  formados  de  diversas  mercaderias,  se  practicara 
d  aforo  por  la  dominante.  Se  entiendo  por  materia  dominante,  la  que  entrando 
CB  aiis  de  dncaeata  por  dcnto  cn  los  oompoiientes  de  tm  attkido^  dctefmina  so 
Mtanka,  o  la  qoe,  en  las  tdas  culm  an  si^erficie. 

Art.  110. — ^  los  pesos  resultaren  en  la  Aduana  dfstintos  a  los  declarados 
cn  el  pedido  se  cobrara  50%  de  recargo  sobre  los  derechos  correspondientes, 
cuando  el  exceso  del  peso  fuere  de  15%  o  mas  que  el  declarado ;  pero  si  el  exceso 
lucre  menor,  o  d  peso  inferior  al  declarado,  se  cobrara  por  lo  que  resultc. 

Aet.  113. — ^Todo  bulto  manifestado  por  mayor  y  no  entregado  a  la  Aduana 
nor  d  buqoe  lias£a  trdnta  dias  despues  de  su  ll^da,  seri  aforado  de  con- 
ionnidad  con  la  factnra  consular ;  y  sus  derechos  servidok  c  impncilM  cobcadoa 
par  fat  Aduana  al  Agente  o  consignatario  del  buque. 

Todo  bulto  entregado  por  el  buque  con  su  contenido  robado  parcial  o  total- 
mente,  sera  aforado  como  de  contenido  pleno  y  los  derechos,  servicios  e  ira- 
poestos  de  lo  corre^Kmdiente  a*la  faha  serim  cdbiados  por  la  Adnaaa  al  Agente 


Declaracion  del 
r  e  m  i  t  e  n 


Servicio  Consular 
Elcuatoriano 


Fto 


COLON  PANAMA 


JTaeAa 


20  DE  MAYC  OE  1919 


vapor ,  ADVANCE 

Naeionalidad   ,  AM^R  IC  M  A 

Imgar  del  embarque^ 

mm  YORK 

 CIUOAD___ 

JuayaSil   

,  ECUADOR  

THE  GEO  L  SQUIER  MF6  COMPANY 
MUEVA  YORK  C lUDAO  

c,,„^o  SR  B  VIGNOLO   

GUAYAQUIL  ECUADOR 

Valor  en  doUurt  $  ^9%25  

VtUor  en  sueree  _ 


Las  facturas  deberan  scr  prcsentadas  a  mas  tardar 
liasta  6  horas  antes  de  la  salida  del  vapor  6  buque* 
•egun  anundo  oficial  de  la  compania,  de  lo  contrario 
tendran  d  recargo  dd  deredio  adkional  corretpon- 

diente. 

Las  facturas  deben  ser  pagadas  y  retiradas  al 
•Igiitente  dia  detpu^s  de  haber  lido  entregadas  en  la 
acccion.  Exportacion  del  Consulado  y  hatta  dos  horas 
antes  de  la  hora  oficial  asandida  paim  la  talida  dd 

b^aue. 

No  se  permite  escrlMr  entre  lineas. 
Ni  hacer  enmendaturas  ni  borrones. 


LEY  DE  ADUAJ>jA 


O  -J 

UJ  LU 

1 

o 

UJ  — 1 

1—  « 

NoTA. — T  o  d  o  s  los 
daros  de  estos  form- 
ularibt  dd>en  ser  Ilcna- 
doa  por  los  interesados, 
quienes  pueden  dirigirse 
al  C6ntiil  9aca  cualquier 
dnda* 


DERECHOS  CONSULARES 

Toda  importacion  en  el  territcrio  de  la  Rcp6blica 
del  Ecuador  requiere,  para  su  dcspacho  cn  las  aduanas 
nacionales,  la  presenUct6n  de  una  factura  consular  que 
exprese:  a)  los  nombres  del  rcmitente,  del  consigna- 
tario, de  la  cmbaracacion  y  su  capiian,  la  bandera  del 
barco  y  el  lugar  de  destinacion;  b)  el  valor  total  de  las 
mercaderias  comprendidas  cn  la  factura;  c)  las  marcas, 
numeros  y  numero  del  bulto;  d)  las  clases  de  los 
mismos;  por  ejcmplo;  •  fardos,  cajas,  barrilcs,  etc.;  e) 
cl  peso  bruto  y  ncto,  cn  kilos,  dc  cada  bulto  separada- 
mente  6  dc  varios  bultos  juntos,  siempre  que  contcngan 
la  misma  mercaderla;  /)  su  contenido,  prccisando  la 
clase  de  mercadeiias,  ain  vsar  tenniaoa  generaleak 
tales  como  lanas,  algodones,  ferreterlas,  etc.  Las 
facturas  consulares  debcn  estar  redactadas  en  espanol 
y  lirmadas  por  sus  remitentcs  6  representantcs  cn  c^ 
pucrto  de  cmbarque. 

Tanto  las  facturas  consulares  co^o  los  sobordos 
y  las  listas  de  cncomicndas  seran  extendidos  cn  cinco 
cjemplarcs  iguales,  todos  los  cuales  «crin  prescntados*/ 
para  la  certificacion  consular,  antes  de  que  la  cmbara- 
cacion a  que  se  refiercn  hubiera  salido  del  puerto, 
debiendo  el  Consul  dcvolver  un  original,  firmando  de 
su  puno  y  letra  al  cmbarcador  y  armador,  respectiva- 
mente. 

Los  consules  ecuatorianos  cobraran  los  siguientes' 
derechos^ 

Por  ccrttficact6n.dc  facturas  consiilares  hasta  el 
valor  de  den  sucres,  un  quinto  de  condor,  sea  dot^ 
sucres  6  su  equivalente. 

Por  certificacion  de  facturas  cuyo  valor  exccda  de 
cien  sucres,  tres  por  ciento  sobre  el  valor  declarado. 

Por  certificacion  de  sobordos,  cuarcnta  por  cicnto 
sobre  el  valor  total  dc  las  recaudacioncs  por  facturas* 

Por  certificaci6n  de  listas  de  encomiendas,  vetnti- 
cfnco  oentaros  de  sucrc  por  cada  cucomlenda. 

Por  certificacion  de  dcclaraciones  rcferentcs  a 
factura  consular,  sobordos,  listas  dc  encomiendas,  etc, 
un  condor,  6  scan  diez  sucres. 

Por  certificacion  de  patentes  de  sanidad,  un  condor, 
6  sean  diez  sucres. 

Cuando  las  facturas,  sobordos,  listas  de  encomien- 
fueren  prcsentados  despu^  de  haber  salido  la 
embarcacidn  k  que  se  refieren,  se  cobrari  por  su 
legalizacion,  ademas  de  los  derechos  ya  expresados, 
lot  siguientes  derechos  adicionales;  por  facturas,  uno 
por  ciento  mas;  sobordos,  diez  por  ciento  mas;  por 
listas  de  encomiendas,  diez  centavos  de  sucre  mas  por 
cada  una. 


NOTA.— Un  condor  vale  diez  sucres,"  6  sea  $5.00. 
El  Sucre  (S/.)  esta  dividido  en  cien  centavos.  Equi- 
Valencia  del  sucre:  lOlSO  oro. 


( 

I 


HOW  SHIPMENTS  ARE  MADE  237 


shipments  to  Latin  America  has  been  the  subject  of  consider- 
able criticism  of  late.  This  problem  has  received  much  con- 
sideration at  all  the  international  conferences  of  American 
states,  and  resolutions  have  been  passed  recommending  the 
adoption  of  a  uniform  consular  invoice,  the  abolition  of  cer- 
tificates of  origin,  consular  certification  of  bills  of  lading,  and 
the  reduction  of  the  consular  fees  as  far  as  possible  to  amounts 
necessary  to  cover  the  cost  of  maintaining  the  consular  serv- 
ice. These  reforms  still  remain  to  be  adopted. 

There  is  justification,  however,  in  the  requirement  of  the 
presentation  of  consular  invoices  in  connection  with  the  clear- 
ance of  shipments  to  various  countries  on  the  ground  that  it 
facilitates  the  compilation  of  commercial  statistics,  prevents 
undervaluation  and  fraudulent  entries,  and  supplies  the  funds 
to  maintain  the  consular  service. 

With  the  exception  of  three  countries  in  Latin  America- 
Argentine,  Costa  Rica  and  Uruguay— the  rest  require  presen- 
tation of  consular  invoices  for  the  clearance  of  shipments. 
Failure  to  comply  with  this  requirement  will  provoke  a  heavy 
penalty  in  certain  countries.  In  other  countries  importers  are 
allowed  to  clear  their  shipments  without  the  consular  docu- 
ments, but  are  obliged  to  furnish  a  bond  for  their  subsequent 
presentation.  It  is  important,  therefore,  for  the  shipper  to 
forward  the  consular  documents  by  the  same  steamer  in  which 
the  goods  are  being  sent  to  protect  the  consignee  against  fines 
or  delays* 

Contents  of 
Consular  Invoice 

While  there  are  some  differences  in  consular  invoices  to 
foreign  countries  the  following  information  is  generally  re- 
quired from  the  shipper:  Name  of  shipper,  vessel,  captain, 
consignee,  and  port  of  destination;  mark,  number,  and  weight 
of  each  package,  character  of  packing  employed,  number  of 
packages,  contents  value. 

Description  of  the  contents  must  be  in  detail.  It  must  l^e 
absolutely  accurate.  Information  must  be  given  in  connection 
with  the  component  material,  and,  in  case  of  fabrics,  detailed 


m  EXPORTING  TO  THE  WORLD 


information  is  usually  required  as  to  length,  width,  finish,  and 
thread  count.  A  separate  consular  invoice  is  required  for 
each  consignment,  and  in  most  cases  for  each  mark,  even  when 
ccHistituting  part  of  a  consignment 

The  language  of  the  country  of  destination  should  be  used 
wherever  possible  although  in  some  countries  invoices  in 
English  are  permissible.  Consignees  who  do  not  understand 
English,  however,  may  be  compelled  to  have  translations 
made,  which  is  quite  an  expense  in  itself. 

How  Comuiar 
Fees  Are  Deiirmined 

Cbflsnlar  fees  involved  in  the  certification  of  invoices  arc 
determined  by  the  value  of  the  shipment,  excepting  in  a  few 
cases.  They  range  from  $1  per  set  of  inviMces,  regardless  of 

the  value  of  the  shipment,  to  6  per  cent  of  the  invoice  value 
on  some  shipments.  Some  countries  require  certification  of 
bills  of  lading,  in  others  no  fee  is  charged  for  this  service. 

Special  Regulations 
im  Certain  Countries 

In  some  countries  like  G>lombia  and  Venezuela  "to  order" 

shipments  are  prohibited.  In  the  case  of  Venezuela,  for  in- 
stance, "to  order"  shipments  are  subject  to  a  surtax  of  25 
per  cent  of  the  duty,  in  addition  to  the  penalty  imposed  on  the 
master  of  the  vessel  carrying  the  shipments.  This  r^^ation 
prevents  foreign  exporters  from  financing  their  shipments  to 
those  countries  by  the  method  of  ''draft  attached  to  docu- 
ments which  is  customary  in  business  transactions  with  other 
countries.  Shipments  to  these  countries  where  "to  order'* 
documents"  are  prohibited  must  be  consigned  direct  to  the 
consignees  who  may  obtain  possession  of  the  goods  without 
the  formality  of  accepting  the  drafts.  The  only  way  to  give 
a  bank  control  over  goods  in  these  countries,  to  be  paid  for 
on  arrival,  is  to  name  the  bank  the  consignee,  and  at  the  same 
time  instruct  it  to  turn  over  the  goods  to  the  importer  upon 
the  payment  of  the  draft. 


HOW  SHIPMENTS  ARE  MADE  239 


American  manufacturers  and  reporters  should  not  take  any- 
thing for  granted  in  the  matter  of  making  out  consular  in- 
voices and  preparing  them  to  meet  the  requirements  of 
foreign  countries.  They  should  ask  for  instructions  from 
their  foreign  customers  who  are  presumed  to  know  the  chang- 
ing regulations  of  their  own  country  better  than  the  stranger, 
and  what  is  more  important,  the  American  manufacturers  and 
exporters  should  religiously  follow  them.  This  should  keep 
them  out  of  trouble. 

Other  Documents  in 
Foreign  Shipments 

9 

The  tariff  laws  of  certain  countries  involve  two  columns 
of  duties.  In  one  of  these  columns  is  contained  a  general 
duty  and  in  the  other,  which  is  called  "the  most  favored  na- 
tion column,"  is  the  duty  applying  to  products  of  nations  with 
whom  special  treaties  exist.  A  Certificate  of  Origin  is' 
necessary  in  order  to  take  advantage  of  the  lower  rates  in- 
volved in  "the  most  favored  nation"  column.  This  certificate 
of  origin  must  certify  that  the  goods  arc  the  product  of  one 
of  the  exporting  nations  involved  in  the  treaty,  and  it  must 
accon^pany  the  goods  to  port  of  destination. 

"No  Dumping"  certificates  arc  required  in  certain  British 
colonies  such  as  Australia,  New  Zealand,  South  Africa  and 
Canada.  These  certificates  are  aimed  to  prevent  the  dumping 
of  goods  in  these  colonies  at  a  price  lower  than  the  cost  offi 
production.  The  shippers  must  certify  that  the  invoice  prices 
are  the  customary  prices  obtainable  in  the  country  of  th«r 
origin. 

Where  there  is  a  difference  in  the  prices  or  discounts  at 
home  from  tbe  export  figures  two  sets  of  figures  arc  required, 
one  in  a  column  called  "home  consumption"  and  the  other 
called  "export"  prices. 

The  foUowing  summary  stotement  is  given  showing  in 
tabular  form  the  most  important  requirements  relating  to 
consular  documents. 


240 


EXPORTING  TO  THE  WORLD 


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EXPORTING  TO  THE  WORLD 


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CHAPTER  XVI 


THE  FOREIGN  FREIGHT  FORWARDER 

Foreign  freight  forwarder  must  be  well  informei>— F(»- 
wari»x  should  have  his  own  warehouses— how  foreign 

FREIGHT  FORWARDER  OPERATES— MetH<X)S  DIFFER  ON  THE  ATLAN- 
TIC SIDE — Large  concerns  use  freight  forwarders — What 

FORWARDER  CHARGES  FOR  HIS  SERVICES— ADVANTAGES  OF  FREIGHT 
FORWARDERS— CRITiaSlC  AGAINST  FORWARDING  BUSINESS. 

The  Foreign  Freight  Forwarder  Js  a  handy  man. 

Without  him  hundreds  of  manufacturers  would  be  forced  to 
attend  to  their  own  shipments  at  the  port  of  loading,  but  with 
him  the  work  of  loading  merchandise  on  ships  and  supervis- 
ing its  proper  movement  at  the  port  is  ma.de  easy.  Without 
him  manufacturers  at  inland  points  would  of  necessity  have 
to  appoint  agents  at  the  seaports  to  handle  the  routine  of 
placing  goods  on  board  the  ships. 

W.  J.  Riley,  Export  manager  of  the  Judson  Freight  For- 
warding Co.,  of  New  York  City  says  this  about  Foreign 
Freight  Forwarders: 

"A  freight  forwarder  is  one  who  is  able  to  handle  in  every 
detail  any  kind  of  a  shipment  from  any  point  in  this  country 
to  any  point  in  any  other  country,  which  can  be  reached  by 
any  form  of  recognized  transportation. 

"A  forwarder  is  in  business  because  the  requirements  of 
business  have  created  him.  His  services  are  sought  for  the 
same  reason  which  impels  a  man  to  hire  a  plumber  when  he 
has  a  leaky  faucet,  or  to  employ  a  doctor  when  he  is  sick.  The 
point  is  that  the  forwarder  is  a  specialist  in  his  line,  just  as 
truly  as  any  tradesman  or  professional  man  is  a  specialist  in 
his  vocation. 

"He  must  know,  or  be  able  to  find  out  very  quickly,  what 
articles  our  government  will  permit  to  be  imported.  If  there 
are  any  restrictions,  he  must  know  the  character  and  extent 
of  such  limitations  and  how  to  overcome  them. 


843 


244  EXPORTING  TO  THE  WORLD 


Foreign  Freight  Forwarder 
Musi  be  WeU  Informed. 

''He  must  know  all  about  permits,  licenses  and  declara- 
tions which  are  required  and  how  to  obtain  them.  He  must 
have  a  thorough  knowledge  of  all  banking  requirements  and 
collection  facilities  in  this  country  and  other  countries;  he 

must  be  able  to  quote  instantly  approximate  figures  and  quick- 
ly to  quote  actual  figures  of  cost  to  handle  a  shipment  of  any 
commodity  from  point  of  origin  to  final  destination,  including 
all  of  the  elements  which  form  a  part  of  that  cost 

'^e  must  know  all  about  the  various  kinds  of  insurance 
covering  Marine,  War,  Theft,  Pilferage,  Loss  and  Damage,  and 
be  able  to  quote  cost  of  average  against  these  risks. 

"He  must  know  the  customs  regulations  at  home  an4 
abroad,  as  well  as  the  most  favorable  trade  routes  at  different 
seasons  and  under  varying  conditions,  in  order  that  the 
promptest,  most  economical  and  most  satisfactory  service 
may  be  secured  not  only  for  the  consignor  in  this  country, 
but  for  the  consignee  in  a  foreign  country. 

"In  short,  a  Forwarding  Agent  must  know  everything  in 
connection  with  transporting  a  shipment  which  the  shipper 
does  not  know,  and  which  he  cannot  learn  without  incurring 
a  greater  expense  than  the  cost  of  the  forwarder's  services. 

"Having  stated  v^hat  a  forwarder  must  know,  it  follows 
that  he  must  be  able  to  translate  his  knowledge  into  service. 
Otherwise,  his  service  which  is  all  that  he  has  to  sell,  would 
be  useless  as  the  wisdom  of  an  astronomer  in  toting  a  hod 
of  bricks. 

"He  must  make  prompt,  complete  and  courteous  replies  to 
all  inquiries,  and  must  antic^mte  the  shipper's  needs  and 
provide  him  with  shipping  instruction  blanks  to  be  filled  out 
to  meet  all  possible  emergencies. 

Forwarder  Should  Have 
His  Own  Warehouses. 

"He  should  be  able  to  immediately  place  insurance  with  any 

insurance  company  named  by  the  shipper  or  to  arrange  for 
such  insurance  under  a  blanket  policy  which  every  up-to-date 
forwarder  provides  for  immediate  use.    He  must  maintain 


THE  FOREIGN  FREIGHT  FORWARDER  245 


his  own  warehouse  or  have  warehouse  connections  to  take 
care  of  goods  at  assembling  points  and  at  ports  of  exit  pend- 
ing shipment  He  must  make  aU  arrangements  to  comply 
with  custom  house  and  consular  requirements. 

**The  Forwarder  must  secure  and  book  steamship  space  for 
each  individual  shipment;  and  in  many  cases,  he  must  con- 
tract such  space  in  advance  for  the  protection  of,  and  in  antici- 
pation of,  the  needs  of  his  patrons. 

"He  must  maintain  offices  manned  by  experts  who  are 
capable  of  attending  to  every  detail  in  connection  with  clear- 
ing shipments  from  port  of  exit  In  many  cases,  this  involves 
the  work  of  locating  cars  in  railroad  yards  and  shipments  in 
freight  houses  and  warehouses,  and  in  seeing  that  they  are 
moved  at  the  proper  time  to  the  docks,  and  cleared  oa  the 
steamer  for  which  booked. 

"He  must  not  only  maintain  offices  in  United  States  ports 
of  exit,  but  he  must  have  agents  or  representatives  in  the 
principal  ports  and  cities  of  all  foreign  countries. 

**He  must  have  banking  credit  and  facilities  for  discounting 
drafts  when  required  and  for  making  collections  at  foreign 
destinations. 

**In  order  to  take  care  of  the  prepajrments  of  rail  and  ocean 
charges  which  are  demanded  by  railroads  and  steamship  com- 
panies pending  reimbursements  on  the  part  of  the  shipper, 
the  Forwarding  Agent  must  have  a  considerable  amount  of 
invested  capital." 

How  Foreign  Freight 

Forwarder  Operates 

The  actual  operation  of  a  Foreign  Freight  Forwara^r 
through  the  various  ports  of  the  United  States  is  described  by 

Mr.  Riley.   He  says: 

"As  the  methods  of  handling  shipments  via  the  Pacific  differ 

somewhat  from  the  methods  via  the  Atlantic  and  Gulf  port?, 
it  may  be  well  to  describe  these  conditions  briefly  and  separ- 
ately. 

"Consignments  to  Australia  or  the  Orient  are,  with  few 
exceptions,  handled  on  thru  bills  of  lading,  covering  rail  and 

ocean  movement  from  point  of  origin  to  final  destination. 
"To  enoy  the  proportional  rail  export  rate  and  other  bene- 


m  EXPORTING  TO  THE  WORLD 


fits  of  these  thru  bills  of  lading,  it  is  necessary  that  every 
consignment  shall  be  contracted  for  and  booked  in  advance 
with  a  steamship  line. 

"A  rail  permit  must  be  obtained  and  the  shipment  mtist 
then  be  made  v^rithin  the  limits  prescribed  by  railroad  regula- 
tions, namely,  from  twenty-five  to  thirty  days  from  Chicago 
territory,  and  from  thirty  to  thirty-five  days  from  eastern 
territories  prior  to  the  scheduled  sailing  of  the  steamer  on 
which  the  shipment  is  booked.  The  permit  number  must  be 
shown  on  the  initial  line  of  the  bill  of  lading. 

**These  thru  export  bills  of  lading  are  not,  as  might  natural- 
ly be  expected,  made  by  the  railroads,  but  are  made  up  by  the 
forwarder  at  his  own  expense.  The  railroad  company  fur- 
nishes the  blanks ;  the  forwarder  fills  them  out  in  every  detail 
including  shipping  permit  numbers,  order  numbers,  descrip- 
tive markings,  and  every  item  and  condition  necessary  to  make 
a  complete  document.  On  nearly  all  Trans-Pacific  shipments, 
it  is  necessary  for  the  forwarder  to  make  up  fjrom  twenty  to 
twenty^five  copies  of  each  lading.  The  shipper  usually  re- 
quires two  or  three  originals  and  several  non-n^tiable 
copies  for  his  own  use ;  the  other  copies  are  required  by  the 
railroad  and  steamship  companies  and  also  for  the  use  of  the 
forwarding  agents  at  port  of  exit  and  for  custom  house  pur- 
poses, etc. 

''As  soon  as  possible  after  the  shipment  moves  from  point 
of  origin  copies  of  the  bill  of  lading  and  full  instructions  as 

to  steamship  bookings  are  mailed  to  the  agent  of  the  forward- 
ing company  at  port  of  exit,  who  then  takes  care  of  the  cus- 
tom house  requirements,  checks  up  the  shipments  to  see  that 
they  are  brought  down  to  the  docks  and  piactd  on  the  boat. 
The  forwarder's  agent  at  port  of  exit  then  advises  the  home 
office  of  particulars  of  clearances,  which  are,  in  turn,  com- 
municated to  tlie  shipper. 

Methods  Differ  on 
The  Atlantic  Side 

"As  is  generally  known,  railroad  companies  do  not  issue 
thru  bills  of  lading  covering  export  shipments  via  Atlantic 
G>ast  ports.  The  rail  movements  and  the  ocean  movements  are 
handled  separately.  On  less  than  carload  lots,  it  is  not  abso- 


THE  FOREIGN  FREIGHT  FORWARDER  247 


lutely  necessary  to  make  advance  steamship  bookings  al- 
though it  is  desirable  to  have  these  bookings  made  when- 
ever this  is  practicable.    These  LCL  shipments  must,  of 

course,  be  warehoused  between  the  time  of  arrival  at  New 
York  and  departure  of  steamer. 

"Carload  lots  require  the  issuance  in  advance  of  a  G.  O.  C. 
permit,  which  permit  is  not  issued  until  after  a  firm  booking 
has  been  made  with  steamship  company  and  evidence  sub- 
mitted that  this  has  been  done.  This  permit  specifies  the  dates 
within  which  the  shipment  must  be  made.  Notice  of  arrival 
of  cars  is  furnished  to  the  forwarder's  agent  at  the  port,  who 
arranges  for  prompt  transfer  to  the  loading  dock. 

^he  steamship  companies  furnish  blank  bills  of  lading  to 
the  forwarder,  who  makes  up,  at  his  own  expense,  all  neces- 
sary copies  to  comply  with  the  requirements  of  the  shipper, 
the  banks,  the  steamship  companies,  customs  house,  etc.  This 
entails  issuance  of  from  fifteen  to  twenty  copies  of  each 
steamship  bill  of  lading.  The  forwarder's  agent  at  port  oi 
exit  sees  that  all  the  papers  controlling  or  concerning  the  ship- 
ment are  mailed  on  the  boat  which  carries  the  freight  or  on 
some  fast  mail  steamer  which  will  reach  the  consignee  as 
early  or  earlier  than  the  goods  will  arrive  at  destination. 

'The  forwarder's  agent  at  the  port  advises  the  home  office 
of  clearances,  which  are  in  turn  communicated  to  the  shippers. 

Gulf  Port  Shipments 
Same  as  Atlantic 

"Shipments  via  Gulf  ports  are  handled  practically  in  the 

same  way  as  via  the  Atlantic.  It  might  be  stated  at  this 
point  that  the  question  of  having  railroads  issue  thru  bills 
of  lading  from  point  of  origin  to  destination  via  Atlantic  and 
Gulf  ports  is  now  having  serious  consideration.  The  consensus 
of  opinion  is  that  arrangements  for  such  thru  bills  of  lading 
will  be  made  in  the  near  future." 

Large  Concerns  Use 
Freight  Forwarders, 

Larger  concerns  that  have  their  own  export  organizations 
are  accustomed  to  employ  the  services  of  the  Foreign  Freight 


248  EXPORTING  TO  THE  WORLD 


Forwarder,  declares  Mr.  Riley.  "The  reason  for  this  "  says 
Mr.  Riley  "is  that  the  forwarder's  connections  and  dealings  are 
so  wide  and  cover  so  many  different  fields  of  operation,  bring- 
ing him  into  contact  with  cargo  or  so-called  tramp  steamships 
as  well  as  with  all  of  the  regularly  established  lines,  that  he 
can  frequently  offer  facilities  to  the  big  industrial  companies 
which  their  own  organizations  do  not  cover. 

'The  forwarder,  thru  his  agents  and  correspondents  in 
foreign  countries,  is  able  to  obtain  particulars  of  manufac- 
tured articles  and  materials  for  which  there  is  a  market  in 
foreign  countries.  These  opportunities  are  submitted  to  the 
forwarder's  customers,  who  are  thus  enabled  to  increase  their 
business  and  frequently  are  placed  in  a  position  to  open  up  an 
entirely  new  field  of  trade.  Many  merchants  and  manufac- 
turers of  this  country  have  received  their  first  foreign  onlera 
thru  the  information  originally  furnished  by  the  forwarders, 
and  these  orders  were  subsequently  retained  by  the  services 
of  the  forwarder.'* 

fVhai  Forwarder  Charges 
Far  His  Services 

Every  Foreign  Freight  Forwarder  has  his  own  price.  Rate 
cards  vary. 

While  rate  cards  show  charges  for  packages  of  various 
we%hts  to  all  the  principal  ports  of  the  world  it  must  be 
remembered  that  these  charges  are  generally  subject  to 
change.  Circumstances  often  govern  the  size  of  the  bUl  from 
the  Foreign  Freight  Forwarder. 

In  figuring  up  his  charges  the  Foreign  Freight  Forwarder 
takes  these  points  into  consideration: 
(a)  The  port  of  destination. 

.(b)  The  volume  of  other  shipments  going  to  the  samt 
port 

(c)  Volume  and  character  of  the  individual  shipment 
The  Foreign  Freight  Forwarder  depends  on  the  prices  he 
can  obtain  for  the  shipment  of  goods  on  a  combination  sUp- 
ment  which  otherwise  would  be  subject  to  a  steamship  com- 
pany's minimum  chaiges. 

Here  is  the  way  the  plan  works  out: 
\m  Twen^  different  manufacturers  having  goods  to  ship  for 


THE  FOREIGN  FREIGHT  FORWARDER  249 


tlie  same  destination  abroad  are  clients  of  the  Foreign  For- 
warding Agent.   Each  one  of  these  manufacturers  has  a 

shipment  weighing  half  a  ton  each.  The  ocean  freight  rate 
at  the  point  of  destination  is  $50  per  ton  and  the  steamship 
company  has  a  minimum  charge  of  $50.  Therefore,  if  any 
one  of  these  manufacturers  undertone  to  ship  his  half  ton  of 
merchandise  alone  the  freight  would  cost  him  $50.  In  order 
to  reduce  the  cost,  however,  these  manufacturers  have  ar- 
ranged with  the  Foreign  Freight  Forwarder  to  ship  all  their 
goods  on  one  bill  of  lading  so  that  the  combined  shipment 
would  weight  ten  tons  and  command  a  $£»0  rate  or  a  cost  to 
each  manufacturer  of  $25  per  ton.  The  Foreign  Freight  For- 
warder then  may  charge  each  manufacturer  about  $35,  and 
even  with  this  added  charge  each  manufacturer  effects  a 
saving  of  $15  on  freight 

The  Freight  Forwarder's  principal  source  of  revenue  comes 
from  these  freight  charges  although  he  makes  minor  charges 
for  bills  of  lading,  and  other  things  such  as  cartage,  insur- 
ance, etc 

AdvoHtages  of 
Freight  Forwarders. 

Aside  from  being  almost  indispensable  to  inland  shippers 
in  the  preparation  of  combinations  of  small  shipments  Foreign 
Freight  Forwarders  will  perform  the  service  of  sending  goods 
forward  "freight  collect"  when  steamship  companies  require 
payment  in  advance.  The  Forwarding  Agent  pays  the  freight 
charges  in  advance  and  instructs  his  correspondent  abroad  to 
make  the  collection  from  the  consignees.  Foreign  Freight 
Forwarders  will  also  send  goods  C.  O.  D.  with  instructions  to 
their  correspondents  to  make  collections. 

Foreign  Freight  Forwarders  sometimes  advertise  the  fact 
that  they  discount  manufacturers'  drafts  on  foreign  customers. 
Operations  of  this  sort  are  conhned  solely  to  a  few  large  con- 
cerns that  have  a  sufficient  amount  of  capital  to  undertake 
such  banking  functions.  As  a  matter  of  fact  Foreign  Freight 
Forwarders  in  offering  to  discount  manufacturers  foreign 
drafts  merely  discount  them  with  some  foreign  exchange 
banker  and  then  charge  the  manufacturer  a  small  amount  for 
their  trouble.  Most  assuredly,  they  first  obtain  a  full  report 


«48  EXPORTING  TO  THE  WORLD 


Forwarder,  declares  Mr.  Riley.  "The  reason  for  this,"  says 
Mr.  Riley  "is  that  the  forwarder's  connections  and  dealings  are 
so  wide  and  cover  so  many  different  fields  of  operation,  bring- 
ing him  into  contact  with  cargo  or  so-called  tramp  steamships 
as  well  as  with  all  of  the  regularly  established  lines,  that  he 
can  frequently  offer  facilities  to  the  big  industrial  companies 
which  their  own  organizations  do  not  cover. 

"The  forwarder,  thru  his  agents  and  correspondents  in 
foreign  countries,  is  able  to  obtain  particuljtrs  of  manufac- 
tured articles  and  materials  for  which  there  is  a  market  in 
fore^  countries.  These  opportunities  are  submitted  to  the 
forwarder's  customers,  who  are  thus  enabled  to  increase  their 
business  and  frequently  are  placed  in  a  position  to  open  up  an 
entirely  new  field  of  trade.  Many  merchants  and  manufac- 
turers of  this  country  have  received  their  first  foreign  orders 
thru  the  information  originally  furnished  by  the  forwarders, 
and  these  orders  were  subsequently  retained  by  the  services 
of  the  fOTwarder." 

What  Forwarder  C/targes 
Fmr  His  Smices 

Every  Foreign  Freight  Forwarder  has  his  own  price.  Rate 
cards  vary. 

While  rate  cards  show  charges  for  packages  of  varioi^ 
weights  to  aU  the  principal  ports  of  the  world  it  must  be 
remembered  that  these  charges  are  generally  subject  to 
change.  Circumstances  often  govern  the  size  of  the  bill  from 
the  Foreign  Freight  Forwarder. 

In  figuring  up  his  chaiges  the  Foreign  Freight  Forwarder 
takes  these  points  into  ccmsideration : 
(a)  The  port  6f  destination. 

.(b)  The  volume  of  other  shipments  going  to  the  samt 
port. 

(c)  Volume  and  character  of  the  individual  shipment. 
The  Foreign  Freight  Forwarder  depends  on  the  prices  he 
can  obtain  for  the  shipment  of  goods  on  a  combination  ship- 
ment which  otherwise  would  be  subject  to  a  steamship  com- 

pany's  minimum  charges. 

Here  is  the  way  the  plan  works  out: 
tm  Twenty  different  muiufactnrers  having  goods  to  ship  for 


THE  FOREIGN  FREIGHT  FORWARDER  249 


the  same  destination  abroad  are  clients  of  the  Foreign  For- 
warding Agent.  Each  one  these  manufacturers  has  a 
shipment  weighing  half  a  ton  each.   The  ocean  freight  rate 

at  the  point  of  destination  is  $50  per  ton  and  the  steamship 
company  has  a  minimum  charge  of  $50.  Therefore,  if  any 
one  of  these  manufacturers  undertook  to  ship  his  half  ton  of 
merchandise  alone  the  freight  would  cost  him  $50.  In  order 
to  reduce  the  cost,  however,  these  manufacturers  have  ar- 
ranged with  the  Foreign  Freight  Forwarder  to  ship  all  their 
goods  on  one  bill  of  lading  so  that  the  combined  shipment 
would  weight  ten  tons  and  command  a  $50  rate  or  a  cost  to 
each  manufacturer  of  $25  per  ton.  The  Foreign  Freight  For- 
warder then  may  charge  each  manufacturer  about  $35,  and 
even  with  this  added  charge  each  manufacturer  effects  a 
saving  of  $15  on  freight. 

The  Freight  Forwarder's  principal  source  of  revenue  comes 
from  these  freight  charges  although  he  makes  minor  charges 
for  bills  of  lading,  and  other  things  such  as  cartage,  instur- 
ance,  etc 

Advantages  of 
freight  Forwarders. 

Aside  from  being  almost  indispensable  to  inland  shippers 
in  the  preparation  of  combinations  of  small  shipments  Foreign 
Frei^t  Forwarders  will  perform  the  service  of  sending  goods 
forward  ''freight  collect"  when  steamship  companies  require 
payment  in  advance.  The  Forwarding  Agent  pays  the  freight 
charges  in  advance  and  instructs  his  correspondent  abroad  to 
make  the  collection  from  the  consignees.  Foreign  Freight 
Forwarders  will  also  send  goods  C.  O.  D.  with  instructions  to 
their  correspondents  to  make  collections. 

Foreign  Freight  Forwarders  sometimes  advertise  the  fact 
that  they  discount  manufacturers*  drafts  on  foreign  customers. 
Operations  of  this  sort  are  confined  solely  to  a  few  large  con- 
cerns that  have  a  sufficient  amount  of  capital  to  undertake 
such  banking  functions.  As  a  matter  of  fact  Foreign  Freight 
Forwarders  in  offering  to  discount  manufacturers  foreign 
drafts  merely  discount  them  with  some  foreign  exchange 
banker  and  then  charge  the  manufacturer  a  small  amount  for 
their  trouble.  Most  assuredly^  they  first  obtain  a  full  rq>ort 


UQ  EXPORTING  TO  THE  WORLD 

of  the  manufacturer's  financial  standing  before  offering  to 
discount  his  paper.  Foreign  Freight  Forwarders  are  not 
bankers  in  principle,  and  unless  there  is  a  specific  reason 
manufactttrers  and  exporters  should  have  their  drafts  hand- 
led through  institutions  whose  chief  functions  are  to  handle 
operations  of  this  character. 

The  extent  of  service  offered  by  Foreign  Freight  Forward- 
ers  varies  a  great  deal  Some  forwarden  despatdi  shipments 
to  all  parts  of  the  world  while  others  have  only  a  limited  field. 
Some  excel  in  the  service  rendered  in  certain  sections  of  the 
world  than  in  others.  The  domination  of  a  certain  territory 
by  a  Foreign  Freight  Forwarder  often  results  in  favorable 
quotations  on  fteight. 

The  wise  manufacturer  who  wishes  to  have  his  goods  ship- 
ped to  a  foreign  country  through  a  Foreign  Freight  Foi- 
warder  will  ask  for  quotations  from  a  number  of  them.  In 
tliis  way  he  can  obtain  the  best  terms^  and  possibly  a  distinct 
service  to  suit  his  particular  needs.  Thm  are  plenty  of 
Foreign  Freight  Forwarders  to  be  found  in  the  principal 
American  seaports.  The  idea  is  to  seek  the  competent  one. 

Criticisms  Against 
Fonmrimg  Bumeu 

Like  any  other  business  ^ere  are  abuses  that  creep  into 
the  profession  of  Foreign  Freight  Forwarding  that  must  be 
guarded  against.    The  shipper  can  protect  himself  against 
these  abuses  if  he  follows  the  principle  that  his  oUigatioo  to 
the  cons%nee  is  not  ended  untU  the  goods  have  been  actually 
placed  in  his  possessicm.  The  shipper  should  know  if  his  cus- 
tomer is  entirely  satisfied  with  the  manner  in  which  his  goods 
were  sent.  This  is  not  often  done.  For  instance  when  Foreign 
Freight  Forwarders  ship  goods  to  a  foreign  c(Mrrespondent 
they  send  a  "Way  Bill"  at  the  same  time  with  instmctkms  as 
to  the  various  packages  ams^fned  to  his  care.  These  foreign 
correspondents  are  ordinarily  instructed  to  either  collect 
their  own  charges  from  consignees  or  to  send  the  bill  to  the 
forwarder  in  this  country.  The  latter  method  gives  the  manu- 
facturer or  shipper  a  chance  to  see  what  the  e^^wses  at  the 
other  end  were.   The  former  method,  however,  keeps  the 
shipper  in  the  dark  and  he  knows  nothing  of  the  charges  made 


THE  FOREIGN  FREIGHT  FORWARDER  251 


to  the  consignee  unless  he  makes  an  inqtiify.  Sometimes 
these  charges  are  exorbitant,  and  the  customer  may  not  like 
it  This  has  been  the  cause  of  considerable  complaint  on  the 

part  of  shippers. 

Sometimes,  a  Foreign  Freight  Forwarder  is  very  slow  in 
making  his  shipments  to  out-of-the-way  places.  For  instance, 
if  a  forwarder  received  a  consignment  of  merchandise  to  be 
shipped  to  some  island  in  the  Orient  he  would  wait  until  he 
had  received  other  shipments  to  the  same  point  to  make  a 
saving.  This  often  causes  considerable  delay  and  frequently 
comes  up  in  the  freight  forwarding  business ;  and  it  is  the  clever 
and  experienced  forwarder  wbo  usually  can  make  proper 
combinations  to  avoid  any  possible  delay  for  his  cUent. 
Manufacturers  are  ^titled  to  prompt  and  economical  service. 
The  functions  of  the  Foreign  Freight  Forwarder  are  to  render 
such  service. 


Chapter  XVII 


MAMNE  INSURANCE 

Hisromr  of  ''UMi]ntwBnBB8r---PiiMCiPii»  w  'MAsmi  1m- 
8UBAKCB— What  is  written  in  Marine  Insurance  Policy- 
Explanation  OF  CLAUSES  IN  MARINE  INSURANCE  TOLICY— HOW 
MARINE  INSURANCE  IS  TO  BE  TAKEN  OUT— GfiNERAt  AND  PAR- 
TICULAR AVERAGE  IN  MARINE  INSURANCE. 

Marine  insurance  is  the  oldest  insurance  in  the  world 

The  early  traders  who  bnved  the  perik  of  the  Medit^^ 
in  the  eariy  oenttaries  rccogniziiig  tiie  necessity  of  protecting 
their  investment  against  the  perils  of  the  seas,  worked  out  some 
form  of  insurance,  the  principle  of  which  is  still  contained  in 
the  present  marine  insurance  policy. 

Rome  knew  of  marine  insurance..  Loans  were  in  those 
days  in  security  of  ship  and  cai^  which  was  repayable  only 
if  the  ship  retnmed  to  port  safely.  These  loans  commanded 
high  rates  of  interest,  and  were  a  favorite  form  of  investment 
among  the  wealthy  Roman  speculators. 

Modem  insurance  may  be  said  to  have  begun  in  the  18th 
century  in  Flanders  and  Portugal  where  maritinie  commerce  was 
at  its  height  in  diat  poriod.  The  LonOiard  merdittits,  also, 
adc^ited  marine  msnrance  to  protect  their  ships  and  cargoes 
against  the  perils  of  the  seas  in  those  days.  It  is  believed  the 
Lombards  introduced  marine  insurance  into  England  in  the 
16th  century  where  it  has  flourished  ever  since.  It  is  said  tiiat 
three-fourths  of  marine  insorance  is  taken  out  in  Gfeat  Britain. 
The  business  is  mostly  in  iht  hands  of  stock  and  mutual  com- 
panies  as  well  as  associations  of  underwriters,  the  oldest  and 
chief  of  which  is  Lloyds.  The  large  shipping  companies  insure 
their  own  vessels  by  keeping  a  book  account  as  insuntnee,  and 
charging  the  losses  against  a  certam  percentage  of  the  earnings. 

The  American  coknies  were  introduced  to  marine  insurance 
early  In  the  17th  century,  although  the  majority  of  maritime 
shipments  from  the  colonies  was  covered  by  insurance  in  London. 
By  the  middle  of  the  19th  century  most  of  the  business  done 
by  American  companies  was  on  home  risks.  It  is  9M  that 
prevkitts  to  the  War  over  half  of  tiie  marine  issorance,  and  tmh 

252 


MARINE  INSURANCE 


253 


fifths  of  the  premiums  went  to  American  branches  of  foreign 
concerns. 

History  of 
"UnderwriUrs  " 

Ptefliaps,  the  pkmeer  insurance  oompany  of  the  world  today  is 

the  Corporation  of  Llo3rds  which  does  business  to  this  day  prac- 
tically along  the  same  lines  as  200  years  ago.  Lloyds  orig- 
inated from  an  informal  gathering  of  marine  insurance  men 
at  a  poptdar  coffee  house  established  in  London  by  Edward 
Lkyd  as  early  as  1«9«.  From  these  mformal  meetings  grew 
an  association  of  marine  insurance  underwriters,  and  later  the 
Corporation  of  Lloyds  which  now  consists  of  over  400  mem- 
bers, was  formed. 

A  risk  in  Lloyds  is  usually  assumed  by  a  number  of  in- 
dividuals. The  British  shipper  who  wishes  to  have  his  vessel 
insured  gives  full  particulars  of  the  risk  on  a  memorandum 
which  is  passed  around  to  the  members  of  Lloyds  for  their 
consideration.  Those  desiring  to  assume  a  portion  of  the 
risk  place  their  initials  on  the  slip  together  vrith  the  figures 
indicating  the  portkm  of  the  total  value  for  whidh  they  accept 
the  responsiblity.  When  the  entire  risk  is  covered  a  formal 
policy  is  prepared,  and  this  becomes  the  actual  marine  m- 
surance  policy.  It  is  then  signed  by  the  individuals  who  ac- 
cepted shares  in  the  risk.  This  is  called  "underwritii^." 
While  marine  insurance  underwriters  flourish  in  England  it  is 
to  be  remembered  that  they  do  not  control  the  business  of 
that  country.  There  are  hundreds  of  companies  that  assume 
the  entire  risk  just  like  they  do  in  the  United  States  where 
the  practice  of  underwriting  marine  Insurance  has  become 
obsolete. 

Principles  of 
Marme  Intmtmee 

When  the  shipper  sends  goods  by  rail  from  one  interior 
point  to  the  other  he  need  not  insure  his  shipment  because 
the  railroad  ordinarily  ^umes  the  re^Kmsibility  but  when  he 
sends  his  goods  out  of  the  country  by  water  he  must  then  take 
out  marine  insurance  if  he  wishes  to  protect  his  shipment 
against  loss.  Steamship  companies  are  exempt  from  all  forms 


264 


EXPORTING  TO  THE  WORLD 


of  liability  excepting  loss  or  damage  arising  from  negligence, 
improper  loading,  stowage  or  delivery  of  merchandise.  All 
other  risks  must  be  assumed  by  the  shipper  or  the  consignee 
ol  the  goods.  In  order  to  cover  these  risks  they  must  take 
out  marine  insorance. 

Marine  insurance  is  primarily  intended  to  cover  only  mar- 
ine risks.  The  shipper  must  show  that  loss  or  damage  was  due 
to  perils  encountered  on  the  high  seas.  Marine  insurance 
policies  do  not  cover  loss  from  other  causes  such  as  deterim- 
tion  of  perishable  goods,  breakage,  leakage  and  robbery,  or 
poor  packing.  The  term  perils  of  the  sea  does  not  cover 
every  accident  or  casualty  which  may  happen  to  the  mer- 
chandise on  the  high  seas.  It  must  be  a  peril  of  the  sea.  In 
1887  Lord  Herschell  said:  "It  is  well  settied  that  it  is  not 
cveiy  km  or  damage  of  whkh  the  sea  is  the  immediate  cause 
that  is  covered  by  the  words,  'perils  of  the  sea.'  They  do  not 
protect,  for  example,  against  that  natural  and  inevitable  action 
which  results  in  what  may  be  described  as  wear  and  tear. 
There  must  be  some  casualty,  something  which  could  not  be 
foreseen  as  one  of  the  necessary  incidents  of  the  adventuie. 
The  purpose  of  the  policy  is  to  secure  an  indemnity  against 
accidents  whidi  nmy  happen,  not  against  events  which  must 
happen." 

What  is  Wfittm  m 
Marim  InsmroHCf  PcUey 

Very  few  persons  ever  take  the  trouble  to  read  the  contents 
of  a  marine  insurance  policy.  Exporters  should  become  thor- 
oughly familiar  with  it  even  thou^  many  of  its  dauses  have 
become  obsolete.  Periiaps  they  are  rehictant  to  peruse  a  solid 
mass  of  type  that  is  difficult  to  read  and  often  necessitates  a 
magnifying  glass  to  make  it  out. 

Here  are  a  number  of  clauses  to  be  found  in  a  marine  in- 
surance policy: 

'This  pdlky  shaU  not  be  vitiated  by  any  unintentional 
error  in  description  of  voyage  or  interest  or  by  deviation  of 
the  vessel  from  the  voyage  described,  provided  the  same  be 
communicated  to  assurers  as  soon  as  known  to  the  assured 
and  an  additional  premium  paid  if  requiied. 

''Beginniiig  die  adventure  upon  the  said  goods  and  mer- 


MARINE  INSURANCE 


255 


chandise,  from  and  immediately  foUowing  ^  loading  thereof 
on  board  of  the  said  vessel,  as  aforesaid,  and  so  shall  continue 
and  endure  until  the  said  goods  and  merchandises  shall  be 
safely  landed  as  aforesaid,  AND  it  shall  and  may  be  lawful 
for  the  said  vessel,  in  her  voyage,  to  proceed  and  sail  to, 
touch  and  stay  at,  any  ports  or  places,  if  thereunto  obliged  by 
stress  of  weather,  or  other  unavoidable  accident,  without 
prejudice  to  this  insurance.  The  said  goods  and  merchandise, 
hereby  insured,  are  valued  (premium  included)  at  not  more 
than  $100,000  by  any  cme  vessel. 

"Touching  the  adventures  and  perils  which  the  said  in- 
surance company  is  contented  to  bear,  and  takes  upon  itself 
in  this  voyage,  they  are  of  the  seas,  fires,  jettisons,  barratry 
€xf  the  master  and  mariners,  unless  the  assured  on  cargo  be 
in  part  owner  of  the  vessel,  and  all  other  perils,  losses  and 
misfortunes  (illicit  or  contraband  trade  excepted  in  all  cases) 
that  have  or  shall  come  to  the  hurt,  detriment  or  damage  of 
said  goods,  and  merchandises,  or  any  part  thereof. 

"And  in  case  of  any  k>ss  or  misfortune,  it  shall  be  lawful 
and  necessary  to  and  for  the  assured,  his  or  their  factors, 
servants  and  assigns,  to  sue,  labor  and  travel  for,  in  and 
about  the  defence,  safeguard  and  recovery  of  the  said  goods 
and  merchandises,  or  any  part  thereof,  without  prejudice  to 
this  insurance;  nor  shall  the  acts  of  the  assured  or  insurers, 
in  recovering,  saving  and  preserving  the  property  insured, 
in  case  of  disaster,  be  considered  a  waiver  or  an  acceptance  of 
abandonment;  to  the  charges  whereof,  the  said  insurance 
company  will  contribute  according  to  the  rate  and  quantity 
of  the  sum  herein  insured;  having  been  paid  the  consideration 
for  this  insurance  by  the  assured,  or  his  or  their  assigns,  at 
and  after  the  rate  of  as  per  endorsement  hereof. 

**And  in  case  of  loss,  such  loss  to  be  paid  in  thirty  days  after 
the  proof  of  loss,  proof  of  interest,  and  adjustment  exhibited 
to  the  insurers  (the  amount  of  the  Note  given  for  the  premium 
if  unpaid,  and  all  sums  due  to  the  Company  from  the  assured 
when  such  loss  becomes  due  being  first  deducted,  and  all  sums 
coming  due  being  first  paid  or  secured  to  the*  satisfaction  of 
the  insured),  but  no  partial  loss  or  particular  average  shall  in 
any  case  be  paid,  unless  amounting  to  five  per  cent.  Provided 
always,  and  it  is  hereby  further  agreed,  that  if  the  said  assured 
shaU  have  made  any  other  msutiace  upon  the  property  afore- 


256 


EXPORTING  TO  THE  WORLD 


Slid,  prior  in  day  of  date  to  this  Policy,  then  the  said  insur- 
ance company  shall  be  answerable  only  for  so  much  as  the 
amount  of  such  prior  insurance  may  be  de&cient  towards  fully 
covering  the  proper^  hereby  insured. 

''And  the  said  insurance  craipany  shall  return  the  premium 
upon  so  much  of  the  sum  by  them  insured  as  they  shall  be  by 
such  prior  insurance  exonerated  from.  And  in  case  of  any  in- 
surance upon  said  property  subsequent  in  day  of  date  to  tins 
policy,  the  said  insurance  company  shall,  nevertheless,  be 
answerable  for  the  full  extent  of  the  sum  by  them  subscribed 
hereto  without  right  to  claim  contribution  from  such  sub- 
sequent insurers.  And  shall  accordingly  be  entitled  to  retain 
the  premium  by  them  received  in  the  same  inanner  as  if  no 
such  subsequent  insurance  had  been  made.  Other  insurance 
i^n  the  property  aforesaid,  of  date  the  same  dayas  this  pol- 
icy, shall  be  deemed  simultaneous  herewith;  and  the  said  in- 
surance company  shall  not  be  liable  for  more  than  a  raUbk 
contribution  in  the  proportion  of  the  sum  by  them  kmmd 
to  the  aggr^te  of  such  stmultaneous  insurance. 

"It  is  also  agreed,  that  the  subject  matter  of  this  insurance 
be  warranted  by  the  assured  free  from'  loss  or  damage  arising 
from  a  riot,  civil  commotion,  capture,  seizure,  or  detentiim  or 
from  any  attempt  thereat,  or  the  subsequences  thereof,  or 
the  direct  or  remote  consequences  of  any  hofftilities,  arising 
horn  the  act  of  any  government,  people,,  or  persons  whatso- 
ever (ordinary  piracy  excepted),  whether  on  account  of  any 
illicit  or  prohibited  trade,  or  any  trade  in  articles  contimband 
of  war,  or  the  violation  of  any  port  regulation,  or  otherwise. 
Also  free  from  loss  or  damnge  resulting  from  measures  or 
opcrationa  incident  to  war,  whether  before  or  after  the  decla- 
ration  thereof. 

"In  the  event  of  risk  of  war  being  assumed  bv  endorsement 
under  this  policy,  the  assured  warrant  not  to  abandon  in  case 
of  capture,  seizure  or  detention,  until  after  the  condemnation 
of  the  pioperty  insured;  nor  until  90  days  after  notice  of  said 
COn<kmnation  is  given  to  this  company.  Also  warranted  not 
to  abandon  m  case  of  blockade,  and  free  from  any  eiq>ense  in 
consequence  of  detention  or  blockade;  but  in  the  event  <rf 
blockade,  to  be  at  Uberty  to  proceed  to  an  open  port  and 
there  end  the  voyage. 

''Memorandum.   It  is  also  agreed,  that  bar,  bundle,  rod. 


MARINE  INSURANCE 


25; 


hoop  and  sheet  iron,  wire  of  all  kinds,  tin  plates,  steel,  mad- 
der,  sumac,  brooms,  wicker-ware  and  willow  (manufactured  or 
otherwise),  straw  goods,  salt,  grain  of  all  kinds,  rice,  tobacco, 
Indian  meal,  fruits  (whether  preserved  or  otherwise),  cheese, 
dry  fish,  hay,  vegetables  and  roots,  paper,  rags,  hempen  yam, 
bags,  cotton  bagging,  and  other  articles  used  for  bags  or 
bagging,  pleasure  carriages,  household  furniture,  skins  and 
hides,  musical  instruments,  looking  glasses,  and;  all  other 
articles  that  are  perishable  in  their  own  nature,  are  warranted 
by  the  assured  free  from  average,  unless  general ;  hemp,  tobac- 
co stems,  mattmg  and  cassia,  except  in  boxes,  free  from  aver- 
age under  20  per  cent.,  unless  general ;  and  sugar,  flax,  flaxseed 
and  bread,  are  warranted  by  the  assured  free  from  average 
under  seven  per  cent.,  unless  general;  and  coffee,  in  bags  or 
bulk,  pepper,  in  bags  or  bulk,  free  from  average  under  ten  per 
cent,  unless  general.  Profits  warranted  free  from  chum  for 
general  average,  but  subject  to  the  same  per  centum  of  partial 
loss  as  if  the  insurance  were  on  goods.  In  case  a  total  loss  of 
profits  be  claimed,  the  underwriters  to  be  entitled  to  a  credit 
of  the  same  per  centum  of  salvage  as  if  the  insurance  were  on 
goods,  and  in  case  of  ccmtribution  in  general  average  for  any 
portion  of  the  goods  at  the  customary  sound  value,  this  com- 
pany to  be  free  from  claims  for  loss  of  such  portion.  Not 
liable  for  loss  arising  from  wet,  breakage,  leakage,  or  ex-, 
posure  of  goods  shipped  on  deck. 

"Warranted  by  the  assured  free  from  damage  or  injury  from 
dampness,  change  of  flavor,  or  being  spotted,  discolored,  mus- 
ty or  moldy,  unless  caused  by  actual  contact  of  sea  water  with 
the  articles  damaged,  occasioned  by  sea  perils.  In  case  of 
partial  loss  by  sea  damage  to  dry  goods,  cutiery,  or  other 
hardware,  the  loss  shall  be  ascertained  by  a  separation  and 
sale  of  the  portion  only  of  the  contents  of  the  packages  so 
damaged,  and  not  otherwise;  and  the  same  practice  shall  ob- 
tain as  to  all  other  merchandise  as  far  as  practicable.  Not 
liable  for  leakage  on  molasses  or  other  liquids,  unless  oc- 
casioned by  stranding  or  collision  with  another  vesseL 

"Warranted  by  the  assured  that  this  msurance  shall  not 
enure  dhnecUy  or  mdirectly  to  the  benefit  of  the  carrier  or 
other  bailee,  by  stipulation  in  bill  of  lading  or  otherwise,  and 
any  breach  of  this  warranty,  and  any  act  or  agreement  by  the 
assured,  prior  or  subsequent  hereto,  wherdby  any  carrier,  or 


EXPORTING  TO  THE  WORLD 


party  liable  for  or  on  account  of  loss  of  or  damage  to  any 
property  insured  hereunder,  is  given  the  benefit  of  any  in- 
■mmiice  affected  thereoii»«^iaU  render  this  poliqr  ol  insurance 
nnll  and  void. 

**In  case  of  any  agreement  by  the  assured,  prior  or  sub- 
sequent hereto,  whereby  any  right  of  recovery  of  the  as- 
soied  for  loss  or  damage  to  any  property  insured  hereunder, 
against  any  person  or  corporation,  is  released,  impaired  or 
lost,  which  would  on  acceptance  of  abandonment  or  payment 
of  a  loss  by  this  company,  have  inured  to  its  benetit,  but  for 
snch  agreement  or  act,  this  company  shall  not  be  bound  to 
pay  any  loss,  but  its  right  to  retain  or  recover  the  premium 
shall  not  be  affected. 

"Warranted  by  the  assured,  that  the  assignment  of  this 
policy  or  of  any  insurable  interest  therein,  as  also  that  the 
subrogation  of  any  right  thereunder  to  any  party,  without  the 
consent  ol  this  company  shall  render  the  insurance  affected 
by  such  assignment  or  subrogation,  void.'* 

The  foregoing  clauses  are  found  in  Marine  Insurance  policies 
for  occasional  shipments  only.  Details  of  a  given  shipment 
are  usually  written  in  these  policies.  Regular  shippers,  how- 
ever, insure  under  "open  policies,"  meaning  that  they  cover 
all  shipments  for  a  stated  period  or  to  a  specified  value,  against 
which  each  individual  sh^mient  is  ^deckved**  as  it  is  made, 
and  Certificate  issued* 

Explanation  of  Clauses 
in  Marime  Jnsmrtmce  PoUey 

"Beginning  the  adventure  upon  such  goods  and  merchandise 

from  the  loading  thereof  aboard  said  ship"  found  in  the  or- 
dinary marine  insurance  policy  is  usually  amended  to  read 
"including  risks  of  craft  to  and  from  the  ship  or  vessel,  each 
craft  to  be  considered  a  separate  risk."  This  amendment  is 
necessary  in  order  that  the  plain  policy  may  apply  before  the 
goods  are  actually  placed  on  board  the  vessel.  There  Is  great 
risk  in  loading  vessels  from  lighters  or  barges,  and  this  makes 
the  amendment  necessary  for  full  protection  under  the  in- 
surance policy. 

'"Thefts"  refer  to  thefts  by  violence  only.  Pet^  thievery  or 
pilfering  by  crews  or  stevedores  are  not  inclndcd  imder 


MARINE  INSURANCE 


"thefts/*  The  former  must  be  covered  by  a  special  contract 
but  an  increased  premium  is  required  in  such  cases.  An  im- 
porter cannot  make  a  claim  against  losses  by  petty  thievery 
or  pilfering  by  crews  or  stevedores  unless  he  is  covered  by 
contract  and  has  paid  the  extra  premium.  The  matter  of 
seeking  this  protection  rests  with  the  importer.  He  is  the 
better  judge  whether  he  cap  run  the  risk  of  losses  from  these 
sources  or  pay  the  extra  premium.  When  a  merchant  falls 
victim  to  the  wiles  of  expert  pilferers  he  naturally  makes  a 
claim  against  the  carrier.  He  is  promptly  met  with  a  denial 
of  responsibility  on  the  ground  that  the  bill  of  lading  merely 
calls  lor  tiie  delivery  of  so  many  packages  ''said  to  contain** 
merchandise,  and  that  the  carrier  has  no  evidence  to  prove 
that  the  packages  contained  the  goods  stolen  from  them. 
Unless  his  insurance  policy  includes  a  clause  providing  for 
protection  against  such  losses  even  the  insurance  company 
will  turn  him  down. 

"Jettison"  means  the  throwing  overboard  of  a  part  of  a 
cargo  or  part  of  the  equipment  of  a  ship. 

"Barratry  of  the  master  and  mariners"  means  the  wrongful 
and  wilful  act  committed  by  the  master  or  crew  to  the  preju- 
dice of  the  owner  or  charterer  of  the  ship.  Mutiny  on  board 
ship  is  barratry.  Barratry  is  not  as  common  nowadays  as 
it  used  to  be. 

A  **warranty**  means  that  the  assured  undertakes  the  obli- 
gation of  doing  or  not  doing  a  particular  thing,  or  that  some 
condition  shall  be  fulfilled,  or  whereby  he  affirms  or  n^;atives 
the  existence  of  a  particular  state  <^  facts. 

The  "memorandum**  is  included  in  marine  insurance  policies 
in  order  to  secure  a  minimum  limit  to  the  underwriter's  liabil- 
ity for  damage  to  perishable  articles. 

Special  Risks  May  be 
Covered  by  Coniraci 

A  marine  insurance  policy  does  not  cover  all  risks.  A  con- 
tract must  be  written  in  these  policies  whenever  a  special  risk 
is  required  to  be  covered.  For  instance,  cai^o  carried  on  dedc 
commands  usually  a  double  rate  for  insurance  than  if  it  were 
carried  under  deck.  When  a  premium  for  such  risk  is  paid 


260 


EXPORTING  TO  THE  WORLD 


the  clause  "Including  the  risk  of  jettison  and  washing  over- 
board" is  written  into  the  insurance  policy. 

Protection  against  war  risks  reqnires  a  separate  insurance 
pohcy  m  each  case.  These  special  policies  are  necessary  of 
course,  only  duringr  war  times.  Little  use  was  made  of  them 
during  the  Spanish-American  war  bnt  when  the  Enropean 
war  broke  out  their  nse  became  imperative. 

Some  of  the  clauses  in  a  certificate  of  insurance  against 
war  risks  only,  are  these: 

This  insurance  covers  only  the  risk  of  capture,  seizure  or 
destruction  or  damage  by  men-of-war,  by  letters  of  mart,  by 
takings  at  sea,  arrests,  restraints,  detainments  and  acts  of 
kmgs,  pnnces,  and  people  authorized  by  and  in  prosecution  of 
hostilities  between  belligerent  nations;  but  excluding  claims 
for  delay,  deterioration  and  or  loss  of  market  and  warranted 
not  to  abandon  in  case  of  capture,  seizure  or  detention,  until 
after  condemnation  of  the  property  insured,  nor  until  dxty 
days  after  notice  of  said  condemnation  is  given  to  this  com- 
P«iy.  Also  warranted  not  to  abandon  in  case  of  blockade,  and 
finec  tom  any  claim  for  loss  or  expense  in  consequence  of 
Wockade,  or  of  any  attempt  to  evade  blockade,  but,  in  event 
of  blockade,  to  be  at  liberty  to  proceed  to  an  open  port  and 
there  end  the  voyage. 

'•Warranted  covering  while  waterbome  only  and  excludimr 
any  risk  on  land.  ^ 

•Warranted  no  German,  Austrian  or  Turkish  ownership, 
mterest,  consignee  or  destination;  and  warranted  free  of  con- 
demnation on  the  ground  of  such  ownership,  mterest.  con- 
signee,  or  destination. 

•*On  shipments  to  neutral  countries  in  Europe  it  is  war- 
ranted that  the  bills  of  lading  shall  show  the  name  and  ad- 
dress  of  the  neutral  consignee." 

It  is  to  be  noted  that  higher  premiums  are  demanded  when 
n^rchandise  is  shipped  in  steamers  owned  by  belligerents  than 
^hose  owned  by  neutrals.  During  the  European  war  British, 
French,  Russian,  Italian  or  Japanese  steamers  were  subject 
to  a  high  war  risk  insurance  owing  to  the  acUvity  of  German 
submarines.  There  was  .no  war  risk  insurance  to  be  had  on 
German.  Austrian  or  Turkish  steamera  because  they  were 
driven  compktdy  from  the  high  seas  soon  after  the  war 
started* 


MARINE  INSURANCE 


"Warranted  covering  while  water  borne  only  and  excluding 
any  risks  on  land**  on  a  war  risk  insurance  policy  means  that 
war  risk  will  be  assumed  while  the  property  is  actually  on 
the  water. 

Goifemmemi  Bwtm  of 
War  Risk  Insurance 

By  Act  of  Congress  in  August,  1914,  there  was  established  a 
Bureau  of  War  Risk  Insurance  in  the  United  Sutes  Treasury 
Department  which  was  empowered  to  issue  only  insurance 
against  risks  of  war.  Congress  appropriated  $5,000,000  for  the 
operatk>ns  of  the  Bureau.  Within  a  year,  however,  the  Bu- 
reau showed  a  large  profit  The  Uw  under  which  the  War 
Risk  Insurance  operated  provided  Aat  protecticm  should  be 
confined  strictly  to  vessels  and  cargoes  owned  by  American 
interests,  and  the  following  clause  was  inserted  in  all  cargo 
polkies:  'Warranted  that  tbe  title  to  the  property  insured 
remains  continuously  in  citizens  ojE  the  United  States  during 
the  term  of  this  policy." 

Kimdi  of  Protsctim 
Now  OhimnobU 

The  shipper  who  wishes  to  pay  the  premium  may  receive 
almost  any  sort  of  protection  nowadays  from  the  marine  in- 
surance companies.  All  that  is  required  is  the  inserting  of 
a  special  danse  covering  tiie  particular  risk  to  be  covered  sub- 
ject, of  course,  to  the  approval  of  the  underwriters.  These 
clauses  generally  known  as  riders,  are  affixed  to  the  regular 
policies.  Shippers  can  be  covered  by  these  clauses  against 
damage  to  goods  while  en  route  from  inland  point  through  to 
inland  point  of  fore^  country  by  rail»  steamer,  etc  They 
can  bck  protected  against  fire»  tiieft»  lealmge,  breakage,  ^rth- 
quakes,  or  tidal  waves. 

How  Marine  Insurancs 
Is  to  Bo  Token  Qui 

Shippers  should  always  demand  instructions  from  their 


263  EXPORTING  TO  THE  WORLD 


customers  as  to  the  kinds  of  insnnuice  protectioii  desifeS  as 
the  latler  must  pay  the  bill  in  the  end.  It  is  tip  to  the  customer, 
therefore,  to  explain  what  he  wants  in  the  way  of  insurance  and 
what  he  is  willing  to  pay  for  it.  In  quoting  c.i.f.,  however, 
manufacturers  should  always  be  careful  that  they  accurately 
describe  the  kind  of  insurance  proposed  and  included  in  the 
Ci.f.  prices.  When  goods  are  shipped  through  Foreign  Freight 
Forwarders  it  is  usually  the  custom  to  instruct  how  and  for 
much  to  insure.  Export  commission  houses  attend  to  their 
own  insurance  without  waiting  for  instructions.  It  is  the 
manufacturer  who  does  his  own  shipping,  however,  who  must 
be  careful  that  this  important  matter  is  attended  to  and  never 
overlooked. 

The  safest  tiling  to  <k>  is  to  see  that  the  insurance  com- 
pany covers  all  risks  from  the  moment  the  goods  leave  the 
factory  until  they  actually  reach  the  foreign  customer.  Some- 
times, there  are  delays  in  clearing  the  goods  at  the  custom 
house  in  a  foreign  country.  It  is  a  wise  thing  to  allow  a 
margin  of  about  20  or  30  days  so  as  to  have  full  protection 
up  until  the  time  they  actually  reach  the  consignee.  The 
matter  of  insurii^  for  land  risks  as  well  as  sea  risks  should  be 
taken  up  with  the  customer,  however.  He  may  not  desire  to  pay 
the  higher  premium  unless  he  knows  what  it  is  actually  about. 
When  he  is  convinced  of  the  virtue  of  such  a  policy  he  will  read- 
ily agree  to  pay. 

Hew  Imtmmce 

Bakers  Operate 

There  are  Marine  Insurance  brokers  to  be  found  in  all  the 
principal  ports  of  the  United  States.  Eaqxvrt  oommisskm 
houses  and  laige  manufacturers  usually  employ  the  services 
of  insurance  brokers  because  they  are  in  constant  touch  with 
conditions  in  the  marine  insurance  business  which  gives  them 
an  advantage  of  being  able  to  obtain  not  only  lower  rates  but 
additional  features  of  protection. 

Insurance  brokers  derive  their  income  from  commissions 
awarded  to  them  by  the  insurance  companies.  These  com- 
missions range  anywhere  from  2^  per  cent  to  5  per  cent. 
Brokers  are  in  very  close  touch  with  all  marine  insurance 


MARINE  INSURANCE 


263 


companies.  They  understand  their  pdides  and  their  practices 
thoroughly. 

General  and  Particular 
Average  in  Marime  Inmrance 

Partial  losses  sustained  in  the  shipment  of  merchandise  by 
sea  are  known  by  the  name  of  average.  According  to  Ben- 
jamin Rush,  President  of  the  American  Foreign  Insurance 
Association,  particular  average  is  the  damage  resulting  to 
the  subject  matter  one  has  insured,  such  as  the  bale  of  goods 
being  damaged  by  water,  or  the  mast  being  carried  away  in 
a  storm.  "General  Average,"  says  this  same  authority,  "re- 
quires the  act  of  man.  It  is  the  oldest  law  of  commerce  in 
existence.  It  came  into  existence  in  the  Island  of  Rhodes, 
over  8,000  years  ago.  This  is  the  way  it  came  up :  In  those 
days  ships  were  very  small,  propelled  by  one  sail  or  oars,  and 
the  merchant  accompanied  his  gpods.  Frequently  a  storm, 
would  come  up,  and  the  only  way  to  save  the  lives  of  those 
on  board  was  to  jettison  some  of  their  merchandise,  and  every 
merchant  would  say:  *You  throw  overboard  my  friend's  goods 
and  leave  mine  here.'  This  involved  disputes,  of  course,  and 
many  valuable  lots  of  merchandise  were  sunk  and  many  men 
drowned  because  of  those  occurrences.  Finally  they  came  to 
the  condusioa  that  if  one  man's  goods  were  tiirown  overixMurd 
they  would  all  chip  in  and  pay  their  proportionate  share.  In 
other  words,  that  which  was  sacrificed  by  one  would  be  paid 
by  the  contributions  of  all.  It  has  got  to  be  the  voluntary 
sacrifice  by  the  act  of  man  to  avert  a  threatened  peril  at 
sea,  and  it  has  got  to  be  successful  at  least  in  part.  When  it 
occurs  everybody  chips  in  his  proportionate  sluure  of  the  loss, 
the  man  who  lost  his  particular  merchandise  chipping  in  his 
contribution  also.  Every  man  gives  alike.  Then  if  your  mer- 
chant is  insured  he  goes  to  his  underwriter  and  says:  *I  have 
suffered  a  general  average  loss  of  two  or  five  or  ten  per  cent 
on  my  goods;  pay  up.  And  on  practically  every  policy,  unless 
it  is  written  free  of  all  average,  you  get  whatever  proportion 
it  is  insured  for." 

This  definition  means  that  an  exporter  who  loses  his  goods 
by  general  average  must  also  pay  his  share  of  the  loss  as 
welL  This  liabtli^  for  a  oontributioa  to  general  average  is 


S64  EXPORTING  TO  THE  WORLD 


justified  t)y  the  common  law.  If  the  shipper  has  not  protected 
the  goods  he  is  shipping  by  a  marine  policy  that  covers  general 
average  he  is  the  loser.  The  shipper  or  the  rightful  owner  of  the 
goods  will  be  notified  in  due  coarse  that  he  is  subject  to 
assesment  to  meet  general  average  costs.  If  a  marine  in- 
surance policy  protects  him  he  has  only  to  notify  his  under- 
writer and  the  latter  will  take  care  of  this  matter. 

The  "YcHrk-Antwerp"  rules  framed  in  a  conference  of  ship- 
owners, merchants,  and  underwriters  many  years  ago  in  the 
cities  of  York  and  Antwerp  serve  as  the  basis  for  determin- 
ing what  general  average  losses  really  are. '  Bills  of  lading 
usually  contain  a  provision  providing  that  general  average 
adjustments  shall  be  made  under  these  rules.  In  the  absence 
of  this  provision,  however,  the  laws  of  the  country  to  which 
the  ship  is  botmd  govern  these  adjustments. 

General  average  amtributions  are  justified  when  voluntary 
sacrifices  of  property  or  expenditures  are  made  for  general 
safety.  They  must  be  reasonably  made.  The  cutting  of  masls 
spars,  sails  or  rigging  for  common  safety  in  a  storm  is  ad- 
mitted under  general  average  as  well  as  the  throwing  over- 
hoard  of  merchandise  for  nfety.  Cargo  damaged  by  water 
used  to  extinguish  a  fire  on  board  is  protected  under  general 
average. 

Particular  average  practically  means  partial  damage.  The 
British  law  has  this  to  say  about  particular  average:  "Where 
the  whole  or  any  part  of  the  goods  or  merchandise  insured 

has  been  delivered  damaged  at  its  destination,  the  measure 
of  indemnity  is  such  proportion  of  the  sum  fixed  by  the  policy 
as  the  difference  between  the  gross  sound  and  damaged  values 
at  the  place  of  arrival  bears  to  the  gross  sound  value." 

The  proceeds  realized  from  the  sale  of  damaged  goods 
represents  the  damaged  value  of  goods. 

The  market  value  of  the  goods  had  they  arrived  at  port  of 
destination  sound,  as  taken  on  the  day  of  sale  of  the  damaged 
goods  represents  the  sound  value  of  the  goods. 

The  difference  between  tiiese  two  values  represents  the  de- 
preciation of  loss  and  this  rate  of  depreciation  is  applied  to 
the  insured  value  of  the  damaged  goods. 

A  close  study  of  the  marine  insurance  policy  will  show  that 
the  clause  called  the  "memonuidum*'  exempts  insurers  from 


MARINE  INSURANCE 


265 


a  certain  percentage  of  loss.  It  is  provided  in  this  clause  that 
certain  goods  are  free  from  particular  average  unless  the 
damage  amounts  to  a  certain  specified  percentage.  These 
percentages  vary  in  a  great  number  of  marine  insurance  policies. 


Insurance  With 
PartiaUar  Av€rQg§. 

When  goods  are  susceptible  of  being  damaged  through  rough 
handling  or  by  contact  with  water,  insurance  with  particular 
average  is  taken  out.  Insurance  with  particular  average  is 
generally  taken  out  in  the  shipment  of  textiles  or  other  mate- 
rials likely  to  be  damaged.  In  instances  where  goods  are 
usually  considered  free  from  particular  average  from  their 
very  nature,  and  in  the  absence  of  specific  instructions  the 
shipper  covers  them  F.P.A.  the  consignee  should  always  give 
full  instructions  as  to  covering  his  shipments.  Unless  he  does 
this  misunderstandings  are  likely  to  arise.  In  the  memoran- 
dum of  ^e  insurance  policy  quoted  in  this  chapter  it  is  seen 
that  a  long  list  of  articles  are  named  as  being  free  of  par- 
ticular average.  Some  of  these  articles,  however,  such  as 
liardware  would  be  damaged  if  wet  by  sea  water.  Unless  the 
importer  is  protected  with  particular  average  he  would  have 
to  bear  the  entire  loss. 


Open  Marine 
Insurance  Policies 


Large  shippers  do  not  like  to  be  bothered  by  taking  out 
r^lar  marine  insurance  policies  whenever  they  have  ship- 
ments to  make.  A  short-cut  in  this  routine  is  effected  by  tak- 
ing out  Open  Policies.  These  Open  Policies  cover  risks  up 
to  a  certain  amount  of  money,  provide  for  all  contingencies 
against  which  protection  is  desired  such  as  theft,  breakage, 
fire  risks,  etc,  and  tt  a  fixed  premium.  These  Open  Policies 
are  good  only  for  a  certain  length  of  time  or  until  their  values 
have  been  entirely  exhausted.  When  the  shipper  prepares  to 
send  merchandise  overseas  he  notifies  the  insurance  company, 
covers  for  a  certain  value,  gives  the  name  of  the  steamer,  and 
the  date  of  departure.  The  open  policy  is  endorsed  and  a 
certificate  of  msuraoce  is  sent  to  the  shipper.   The  terms  of 


EXPORTING  TO  THE  WORLD 


MARINE  INSURANCE 


the  original  are  not  written  on  the  certificate  of  insurance 

although  it  has  the  full  force  of  the  r^fiilar  marine  insurance 
policy. 

Dtdming  Values 
Under  Marine  Insurance 

Under  a  marine  insurance  policy  no  proof  of  value  is  re- 
quired. Under  fire  insurance  the  actual  value  of  the  goods 
destroyed  must  be  proven.  If  a  person  insures  his  store  for 
$10,000  under  a  fire  insurance  policy,  and  it  is  destroyed  by 
fire,  an  adjuster  will  endeavor  to  place  the  damage  at  a  figure 
below  the  insured  value.  In  marine  insurance,  however,  if  a 
shipper  insures  for  $50,000  and  the  ship  is  lost,  he  will  get 
$50,000.  This  is  the  difference  between  marine  and  fire  in- 
surance. The  insured  value  is  the  indemnity  value  in  case  of 
total  loss.  Iii  case  of  partial  loss  under  a  marine  insurance 
policy  a  comparison  of  the  damaged  value  and  the  sound  value 
with  the  insured  value  determines  the  amount  of  loss. 

A  value  greater  than  the  actual  value  of  the  goods  is  gen- 
erally declared  for  marine  insurance.  This  is  done  in  order  to 
cover  incidentals  such  as  freight,  cartage,  etc.  As  a  matter 
of  fact  a  shipper  can  declare  almost  any  value  under  a  marine 
insurance  policy  as  long  as  he  is  willing  to  pay  the  higher 
premium* 

Cost  of  Premiums  Vary 
For  Maritie  Insurance 

The  nature  of  the  goods  to  be  hisured,  the  diaracter  of  the 
ship  transporting  them  and  the  port  of  destination  determine 

the  premium.  Policies  covering  merchandise  shipped  to  Eu- 
rope during  normal  times  do  not  command  as  high  a  rate  as 
policies  covering  merchandise  shipped  to  South  American 
ports.  The  flag  flying  on  the  mast  of  a  ship  does  not  change 
the  imtes. 

In  connection  with  marine  insurance  rates  Mr.  Benjamin 
Rush  who  has  already  been  quoted  in  this  chapter  says  this: 

"I  am  aware  that  the  idea  of  the  general  public  regarding 
the  way  insurance  rates  are  made  is  that  a  few  insurance 
company  officials,  who  are  absolutely  devoid  of  consdenoe. 


get  together  once  in  so  often,  and  agree  to  charge  just  as  high 
rales  as  they  think  they  can  get  out  of  a  patient  and  long- 
suffering  public 

"If  it  were  possiUe  to  get  up  a  monopoly  on  such  a  perfectly 
liquid  subject  as  insurance,  possibly  this  might  be  done,  but, 
as  a  matter  of  fact,  it  is  not  possible,  and  consequently  the 
conc^tion  which  I  have  just  stated  is  entirely  erroneous. 

must  always  be  remembered  that  there  are  two  ends  to 
every  transaction  of  international  commerce — one,  let  us  say 
in  the  the  United  States,  and  one,  say  in  some  foreign  country. 

"If,  therefore,  an  underwriter  in  the  United  States  fixes  his 
insurance  rates  too  high,  the  merchant  instructs  his  consignee, 
or  the  shipper,  as  the  case  may  be,  to  place  his  insurance  in 
some  foreign  company  and  country. 

"There  are  literally  hundreds  of  marine  insurance  com- 
panies, and  members  of  Lloyds  in  every  maritime  country  in 
the  globe,  and  since  the  dawn  of  Marine  Insurance  I  have 
never  heard  of  anybody  being  skillful  enough  to  combine  ^h^n> 
into  what  is  principally  known  as  the  Trust;  therefore,  any- 
body who  knows  how  to  write,  and  has  the  price  of  a  three 
cent  stamp,  can  avail  himself  of  the  competition  of  the  whole 
insurance  world  upon  his  own  individual  business. 

"Furthermore,  the  laws  of  the  various  states  of  the  United 
States  are  so  drawn  that  it  is  possible  for  citizens  with  a 
small  amount  of  capital,  say  from  $100,000  to  $200,000  to  or- 
ganize an  insurance  company  and  obtain  a  state  charter. 

''Therefore,  just  as  soon  as  the  margin  of  profit  cm  marine 
insurance  operations  rises  above  a  fixed  minimum  marine  in- 
surance companies  are  organized  to  compete  with  those  pre- 
viously established. 

New  companies 
Enter  field 

**K  very  good  example  of  the  latter  is  to  be  found  in  the 
last  three  years  when  the  large  amount  of  business  resulting 
from  war  conditions  and  the  profits  made  on  war  insurance 
induced  a  number  of  American  fire  insurance  companies, 
which  had  not  hitherto  written  marine  tnstuance,  to  enter  the 
marine  field,  and  which  also  induced  a  number  of  foreign 


26«  EXPORTING  TO  THE  WORLD 


companies  not  hitherto  operating  in  America  to  establish 
agencies  in  the  United  States. 

''Also,  many  new  insurance  companies  were  chartered  and 
established  both  in  the  United  States  and  abroad. 

**I  think  it  is  safe  to  say  that  the  marine  insurance  capacity 
of  the  United  States  market  has  been  doubled  by  this  means 
since  1914.  There  is  at  present,  I  believe,  ample  insurance 
capacity  to  take  care  of  American  marine  insurance  require- 
ments, and  it  is  to  be  hoped  certainly  from  the  merchants'  and 
shipowners*  point  of  view  that  this  large  capacity  will  be  main- 
tained and  increased,  because  it  is  a  guarantee  against  rates  for 
marine  insurance  bang  unduly  h^;h. 

"As  a  matter  of  fact,  over  a  series  of  years,  taking  good 
years  with  bad  they  are  not  high. 

"I  should  say  from  my  own  experience  that  in  a  period  of  from 
20  to  30  years  any  company  which  could  show  an  average 
profit  year  in  and  year  out,  of  say  five  per  cent  of  its  business 
tnrn  over,  which  five  per  cent  would  also  include  the  in- 
terest on  its  invested  funds,  would  be  doing  remarkably  welL 

''Now  as  regards  the  apportionment  to  hazard  between  man 
and  man,  every  marine  insurance  company  keeps  what  is 
known  as  a  classification  system,  the  purpose  of  which  is  to 
show  cm  what  branches  of  its  business  it  is  taking  or  losing 

"This  classification  is  divided  into  several  hundred  sub- 
divisions or  book  accounts,  so  that  the  profit  or  loss  in  any 
given  branch  of  the  business  can  be  followed  up  promptly,  and 
necessary  rate  adjustments  made.  If,  for  Instance,  a  dasdfi- 
cation  showed  that  on  trade  with  England,  the  insurance 
company  was  losing  money,  and  that  on  trade  with  Brazil  it 
was  making  money,  the  insurance  company  would  be  put  on 
notice  to  increase  its  rates  to  England,  and  if  its  profits  to 
Brazil  were  unduly  high  some  competitor,  who  also  kept  a 
classification,  would  not  be  very  long  in  forcing  it  to  reduce 
rates  to  that  country  or  lose  its  business. 

**Also  an  account  is  usually  kept  of  the  premiums  received 
from,  and  the  losses  paid  to,  each  ship  owner  or  merchant. 

**Dtgrte&  of  business  abilities  of  different  firms  differ  coo- 
«derably.  It  is  a  usual  occurrence  to  find  merchants  in  the 
same  trade  operating  with  varying  degrees  of  profit  to  them- 


MARINE  INSURANCE 


selves  and  to  their  underwriters.  This  is  also  taken  into  con- 
sideration in  the  making  of  rates. 

"A  cargo  on  any  given  vessel  on  any  voyage  may  well  con 
sist  of  several  hundred  different  kinds  of  merchandise,  each 
subject  to  various  susceptibilities  of  damage,  and  it  is  the 
business  of  the  insurance  underwriter  to  see  that  his  insurance 
rate  is  adjusted  accurately  to  those  hazards  for  each  par- 
ticular kind  of  cargo  shipped,  for  every  voyage,  and  by  every 
kind  of  conveyance,  and  to  all  the  various  hazards  which  are 
generally  lumped  under  the  head  of  marine  perils  and  which 
are  changing  continually. 

''As  an  illustration  of  the  amount  of  bookkeeping  necessary 
to  enable  a  marine  underwriter  to  correctly  adjust  his  rate 
to  hazard  incurred,  I  would  like  to  say  that  some  years  ago 
the  company  of  which  I  am  president  employed  a  firm  of  ex- 
pert accountants  to  go  over  our  accounting  and  classification 
system  with  the  idea  of  introducing  improvements,  and  they 
reported  that  they  had  just  finished  performing  a  8«»ii'^ar 
service  for  the  United  States  Steel  Corporation,  and  they  were 
considerably  surprised  to  find  that  in  order  to  achieve  the 
results  desired  it  was  necessary  for  us  to  have  a  considerably 
larger  amount  of  bookkeeping  than  did  the  United  States  Steel 
Corporation,  although  our  turnover  at  the  time  was,  say,  $10,- 
000,000,  and  the  steel  corporation's  turnover  very  many  hun- 
dreds of  millions. 

'Unless  the  underwriter  adjusts  these  rates  accurately  to 
these  changes  and  conditions,  one  of  two  things  happens.  If 
he  fixes  his  rate  too  high,  a  competitor  comes  along  and  takes 
his  business.  If  he  fixes  it  to  low  he  loses  mbney,  and  if  he 
keeps  on  long  enough,  he  will  have  to  retire  from  business. 

"With  a  marine  underwriter,  therefore,  it  is  a  matter  of 
literal  business  life  to  see  that  his  rates  are  on  the  whole 
correctly  gauged  to  the  hazard  run. 

"If  he  fails  to  do  so,  he  is  very  speedily  eliminated  from 
the  field  of  competitive  insurance,  but  even  if  he  succeeds  in 
doing  all  that  I  have  outlined  hitherto,  in  order  to  turn  in  a 
satisfactory  balance  sheet  at  the  end  of  the  year,  he  has  got 
to  be  a  good  deal  more  than  a  mere  keeper  and  observer  of 
accounts. 

**The  way  the  marine  underwriter  makes  his  money  is  by 
taking  the  business  which  has  been  operating  at  a  loss,  find- 


270 


EXPORTING  TO  THE  WORLD 


ing  out  tht  cause  of  that  loss,  and  eliminating  it  By  doing 
this  he  can  for  possibly  a  year  or  two,  until  his  competitor 
finds  out  his  method,  obtain  a  fair  share  of  profit  upon  a  given 
trade. 

"I  can  cite  as  an  instance  in  point,  the  insurance  of  the  live 
animals  between  this  country  and  Europe,  where  by  the  ini- 
tiative  of  private  underwriters  a  saving  of  some  sax  cents  on 
every  dollar  of  value  on  such  exports  was  secured  to  American 

shippers  and  producers  of  cattle.  The  saving  to  the  con- 
sumer, in  the  course  of  years  ran  into  hundreds  of  millions  of 
dollars,  and  a  business  which  had  been  insured  at  a  loss  at  a 
rate  of  seven  per  cent,  ultimately  was  insured  at  a  profit,  at 
a  rate  of  one  quarter  per  cent. 

"Another  illustration  which  occurs  to  me,  was  the  insurance 
of  merchandise  to  Australia,  where  there  had  been  a  very  bad 
run  of  fires  on  shipboard  for  several  years,  which  fires  were 
ultimately  traced  to  the  shipment  of  some  oil  clothing  that 
had  caused  spontaneous  combustion. 

**Argus,  himself,  with  his  hundred  eyes,  is  no  more  alert 
than  is  a  marine  underwriter  to  the  adoption  of  every  ex- 
pedient which  may  result  in  saving  of  loss  by  avoidable  perils, 
and  thereby  obtaining  a  profit  on  his  transaction,  and  in  the 
IcHig  run  a  reduction  in  the  cost  of  insurance  to  the  con* 
sumer.'* 

How  Marine  Insurance 
Clmms  Are  CoUecUd 

The  shipper  usually  collects  all  claims  due  on  the  marine 
insurance  policy  for  the  consignee  although  the  matter  of 
collection  is  up  to  the  latter.  The  shipper  does  this  merely 
out  of  courtesy.  He  assumes  no  re^nmsibility  in  the  matter; 
he  merely  acts  as  agent  for  the  consignee. 

When  daims  are  made  against  marine  insurance  companies 
having  agents  in  foreign  countries  the  matter  of  collecting 
insurance  money  is  charged  with  little  difficulty.  Shippers 
and  consignees  should  always  take  pains  that  they  cover  them- 
selves with  insurance  policies  of  companies  having  agendea 
in  the  countries  involved.  Such  connections  make  it  easy  to 
collect  their  just  claims. 

In  cases  where  the  goods  are  damaged  it  is  difficult  to  {dace 


MARINE  INSURANCE 


271 


the  responsibility  for  such  damage.  Who  must  pay,  the  ship- 
owner or  the  marine  insurance  company?   If  the  damage  to 

merchandise  is  caused  by  the  shifting  of  the  cargo  the  ship- 
owner would  be  held  responsible  unless  the  captain  of  the 
vessel  immediately  upon  arrival  at  port  files  a  Protest  in 
which  he  declares  that  the  vessel  experi^iced  unusual  lou^ 
weather  durii^  the  voyage  which  might  have  caused  the  shift- 
ing of  the  cargo.  This  Protest  is  duly  attested  to  before  the 
consul  of  his  country  at  the  port  of  destination.  When  such 
I'rotest  has  been  filed  daim  for  damages  is  laid  before  the 
insurance  people  who  are  then  held  responsible.  Payment  is 
immediatdy  made  unless  they  dispute  the  captain's  daim. 

The  following  steps  are  necessary  in  collecting  insurance: 

Underwriters  should  be  immediately  informed  of  the  ar- 
rival of  the  damaged  goods  so  that  they  may  appoint  an  expert 
to  examine  the  goods. 

The  expert  will  then  make  his  recommendations  which  are 
usually  that  the  goods  be  sold  at  auction. 

Evidence  in  Ae  form  of  a  bill  of  lading  is  required  to  show 
that  the  goods  were  actually  shipped. 

Title  to  the  insurance  which  is  conveyed  by  the  Certificate 
of  Insurance  must  be  produced. 

A  formal  sworn  statement  of  the  amount  of  damages  sus- 
tained whidi  may  be  had  from  the  local  authorized  represent- 
ative of  the  underwriters'  should  be  obtained.  If  it  is  impossible 
to  obtain  this  statement  the  official  statement  of  the  custom 
house  authorities  certified  by  the  consul  of  the  country  from 
which  the  goods  were  shifted  is  suffident 

A  sworn  statement  indicating  how  the  damage  was  caused 
is  necessary.  The  sworn  statement  from  the  examiners  is 
usually  sufficient  but  where  this  will  not  be  allowed  it  may 
be  necessary  to  obtain  a  certified  copy  of  the  captain's  sworn 
Protest  which  should  give  full  particulars.  Without  tiiese 
particulars  it  will  be  difficult  to  convince  the  insurance  oom^ 
pany  of  the  justice  of  the  claim. 

A  copy  of  the  commercial  invoice  is  necessary. 

The  foregoing  documents  once  in  the  hands  of  the  con- 
signee should  serve  to  make  the  ootlection  on  the  insurance 
easy.* 

The  collection  of  claims  from  marine  underwriters  in  which  frequent  delay  it 
ocperieneed,  is  in  most  instaacea  d«e  to  the  kck  of  necessary  docmnents  and 
ouer  information.  In  snch  proceedings  the  shipowner,  the  charterer,  the  exporter 
MM  utm  importer,  each  has  a  duty  to  perform,  and  unless  that  duty  is  properly 


272 


EXPORTING  TO  THE  WORLD 


discharged  the  marine  underwriter  is  naturally  delayed  in  arranging  the  payment 
of  a  claim.  With  a  view  to  facilitati^  HUb  work»  the  Fraak  B.  Hall  ft  ComiNmr 
have  issued  a  small  booklet  which  points  out  that  before  a  claim  can  be  collected 
from  the  insurance  companies,  or  underwriters,  it  is  necessary  to  show  that  a  peril 
inarad  agaiast  kaa  eoaM  to  tlw  liort,  detfiuicut  or  daaaage"  of  the  ship  or  tiM 
interest  insured,  and  that  it  amounts  to  the  required  percentaga.  This  is  usually 
done  by  doctunents  known  as  the  protest  (generally  an  c«tendad  protest),  the 
fcportt  of  aanrey  and  the  receipted  repair  MBa  or  Towclwi. 

As  soon  as  possible  after  the  arrival  of  a  vessel  at  a  port  of  refuge  or  of 
destination  (and  within  twenty-four  hours  after  arrival)  the  captain  (or  master) 
•f  tbe  vcaad  arasl  Bole  Ma  proleal  bcfare  a  aotary  pnbHe  or  eoaattlar  oAeer  hiMtf 
stating  what  has  happened.  If  it  then  appears  that  the  loss  or  damage  is  sufRcient 
to  warrant  the  making  of  a  cktim  upon  nnderwriters,  the  protest  most  bo  extended  to 
Inehrfe  a  aariatlve  of  voyage,  detaiHng  tiw  eaoaea  of  A«  loaa  or  damage. 
Whenever  possible,  the  master  should  be  sent  to  the  office  of  the  adjusters  to 
have  them  extend  the  protest.  Tbe  log  books  for  the  voyage  daring  which  the 
loaa  OiT  daango  haa  occ  lined  Aoold  bo  ddivercd  to  tiia  adfvatera.  The  note  of 
protest  is  not  a  sworn  document  and  is  sigrned  by  the  master  only.  An  extended 
yaotest  is  signed  and  sworn  to  by  the  master,  one  or  more  deck  officers,  one  or 
■Mfo  aBgteocr  oftccra  nd  ona  op  flMro  awiibafv  of  tiM  CMW« 

Immediately  upon  arrival  of  a  damaged  vessel  at  •  fort  of  distress,  or  of 
destination,  the  master  must  notify  his  owners  by  caUa  and  the  owners  in  turn 
■mat  immediately  notify  tfw  adiastera,  wbo  win  notify  tbe  Tariona  tmderwritera 
interested.  The  owners  or  their  agents  may  appoint  a  surveyor  to  represent  owners' 
interests,  or  their  own  superintendent,  if  they  have  one,  may  act.  A  survey  will  be 
arranged  by  titt  adhwtera  with  the  uadei' writer  a.  If  possible,  all  the  sanreyora 
should  agree  apon  the  causes  and  extent  of  the  damage  and  should  sign  a  joint 
survey  report.  Any  surveyor  differing  from  the  others  should  decline  to  sign  tho 
joint  survey. 

After  the  damage  has  been  repaired,  the  surveyors  should  make  further  reports 
stating  that  repairs  have  been  completed  to  their  satisfaction  and  that  the  vessel 
is  in  a  seaworthy  condition  and  fit  for  the  carriage  of  dry  and  perishable  eargoea 
or  of  such  cargoes  as  in  their  judgment  she  is  fit  to  carry.  If  the  vessel  be  tem- 
porarily repaired,  the  reports  of  surveyors  must  show  this  and  their  recommendations 
for  final  repairs.  Cottfnaioa  ahoold  aoC  bo  made  batwaea  tiie  reports  of  ebMaifeatioa 
auryeys  and  damage  surveys.  If  no  marine  surveyors  are  available,  the  master  and 
engineers  of  other  vessels  in  the  port  may  be  called  upon,  but  masters  must  com- 
municate with  their  owners  immediately  in  every  case  and  bear  in  o^ad  tiiat  th^ 
mtist  not  assume  responsibility  unless  absolutely  necessary  or  their  owners  instruct 
them  to  do  so.  Owners  should  always  confer  with  and  obtain  tiba  assistance  of  the 
adjusters. 

All  repair  and  other  bills  relating  in  any  way  to  the  loss  or  damage,  should 
be  forwarded  at  once  to  the  owners  and  by  them  to  the  adjusters.  The  adjusters 
will  examine  them  and  after  consultation  with  vmmat,  aMatar*  aanrajrara,  etc, 
determine  which  may  be  for  owaer'a  account. 

Bills  should  be  receipted  or  receipts  attached  before  they  are  forwarded  to  the 
adjusters.  Owners  should  furnish  to  the  adjusters  particulars  of  the  credit,  if  any, 
to  be  allowed  for  old  material  and  should  also  advise  if  any  of  the  repahr  work  was 
done  on  overtime.  Where  this  latter  is  the  ease,  underwriters  may  be  charged  with 
the  overtime  bonus  only  to  the  extent  to  which  they  have  benefited  thereby  as  by 
the  saving  of  drydock  dues.  Where  the  repairs  have  involved  the  drydocking  of  the 
iressel  owners  shoald  advise  the  adlnaters  when  tiie  Tesael  was  last  previously  on 
drydock,  and  whea  die  would  have  been  due  for  docking  in  the  ordinary  course. 
Where  the  survey  reports  call  for  the  painting  of  the  vessel's  botttmi,  the  adjusters 
ahonld  be  given  ^e  date  when  the  Teasel  woold  next  hare  been  &ue  for  painting 
in  the  ordinary  course.  If  the  repairs  made  at  a  foreign  port  are  partly  temporary 
and  partly  permanent,  or  if  they  are  partly  for  owner's  account  and  partly  for 
nndcrwriteis*  aceoont,  or  if  they  are  paruy  on  aceotmt  of  particvlar  average  damage, 
that  ia  accidental  damage,  and  partly  on  account  of  general  average  sacrifices,  the 
anrveyors  at  the  time  of  their  approving  the  repair  bills  should  be  requested  to 
indicate  on  these  bills  Ik»w  the  various  items  should,  in  their  opinion,  be  dealt  with. 

Where  a  vessel  having  sustained  loss  or  damage  in  the  nature  of  general  average 
arrives  at  a  foreign  port,  the  agent  of  the  vessel  or  master  must  see  that  no  cargo 
is  delivered  to  tiba  cearigwaei  until  a  general  average  bond  or  agreeaMBt  has  been 
signed  and  a  guarantee  given  by  acceptable  underwriters  or  their  agents,  for  the 
payment  of  all  general  average,  salvage  and  (or)  special  charges,  or  until  a  deposit 
sufficient  to  cover  what  they  will  amount  to  has  been  collected  from  the  oauigBaaa. 
The  adjustera  ahoald  ahraya  be  conaultad,  and  if  poaaibla  attaad  to  tbaaa  Mtlara 
tlxemselves. 

Where  the  cargo  is  aeeessarily  discharged  in  the  geaaral  iatarest,  care  shoald 
be  taken  to  note  any  damage  which  may  be  sustained  in  consequence  of  this  forced 
discharge.  While  the  cargo  is  out  of  the  vessel  it  should  be  specially  covered  by 
Inaarance.  Geaeral  average  diabursements  incurred  at  a  port  of  refasa  lioiiM  bt 
aovarad     laaKaaaa  fraaa  fha  port  ol  ftfma  to  the  port  of  daaliMtloM* 


CHAPTER  XVIII 

HOW  ORDERS  ARE  FINANCED 

American  exporters  have  always  enjoyed  good  banking 
VACiUTiES — Methods  of  finanong  shipments  for  export — 
Selling  Goooe  on  open  csedit  basi»— How  commercial  credits 
ARE  €MNn>--^AccinA]fci  cnDiiB---BaL  m  exchange,  or 

DRAFTS. 

The  matter  of  financing  foreign  trade  is  becoming  less 
difficult. 

Amencan  banldng  instvttttions  under  pressure  of  the  neces- 
«ty  of  meettng  the  demaiids  d  Americaii  numu^ictttreni  and 
exporters  are  establishingr  tMranches  in  the  principal  trading 

centers  of  the  world  where  they  may  be  able  to  render  service 
in  tne  matter  of  financing  the  vast  amount  of  business  that  is 
now  done  between  buyer  in  a  foreign  country  and  seller  in 
the  United  States.  American  exporters  are  last  learning  how 
to  use  the  madunery  that  mil  htmg  bade  to  tiiem  the  proceeds 
from  the  sale  of  merchandise  to  a  customer  whom  they  have 
never  seen  and  who  is  doing  business  thousands  of  miles 
away  from  the  source  of  supply. 

Perhaps  one  of  the  strongest  barriers  that  prevents  the 
average  American  business  man  from  efmying  in  busmess 
with  merchants  in  fordgn  countries  is  fear— fear  that  he  may 
not  be  able  to  get  his  money  for  goods  shipped.  There  is  an 
uncertainty  about  it  all,  he  reasons,  and  yet  if  he  knew  the 
familiar  paths  followed  in  this  seemingly  difficult  function, 
and  the  ease  with  which  he  could  transact  business  whether 
his  customer  happened  to  be  in  India  or  Australia  or  South 
America  the  barrier  of  fear  and  prejudice  would  soon  dis- 
appear. 

American  Exporters  Have  Always 
Enjoyed  Banking  Facilities 

The  machinery  of  financing  export  trade  is  old.  American 

274 


HOW  ORDERS  ARE  FINANCED  m 


pioneer  commission  houses  and  other  export  firms  have  been 

familiar  with  the  function  of  financing  export  shipments  for 
many  years.  Although  there  were  fewer  branches  of  American 
banks  existing  in  foreign  countries  in  the  early  days,  our  pioneer 
export  merchants  never  found  it  difficult  to  sell  thdr  goods  and 
obtain  their  money  in  due  time  from  their  customers.  If  there 
were  no  American  branches  in  certain  foreign  countries  where 
American  exporters  did  business  surdy  there  would  be  bank 
branches  of  British,  German,  French  or  Italian  origin.  Within 
recent  years,  however,  American  banking  institutions  recog- 
nizing the  necessity  and  value  of  extending  their  activities  to 
foreign  fidds  in  order  to  cooperate  with  the  growing  number 
of  American  merchants  in  the  foreign  markets  of  the  worid, 
have  placed  their  branches  in  all  the  important  trade  centers 
of  the  world,  and  today  there  is  not  an  important  city  in  any 
section  of  the  giobe  that  does  not  boast  of  having  a  branch 
office  of  some  powerful  American  banking  house.  There  is  no 
question  that  this  branching  and  broadening  out  has  served 
as  a  powerful  stimulant  in  the  development  of  commerce  be- 
tween this  country  and  other  regions  of  the  earth. 

Methods  of  Fktancing 

Shipments  for  Export 

"Wdl,  we  have  got  the  machinery  for  handling  our  export 
trade,**  says  a  merchant.  ''We  have  got  the  ships  to  carry  our 

merchandise;  we  have  got  our  customers  abroad  to  buy  our 
goods;  how,  then,  shall  we  go  about  it  to  obtain  our  money?" 

That  is  the  first  question  that  any  manufocturer  who  is 
branching  out  for  business  in  the  Far  East  or  in  South  Amer- 
ica will  ask.   "How  can  I  get  my  money?" 

It  is  the  purpose  of  this  chapter  to  briefly  describe  these 
methods  so  that  the  details  that  are  necessary  to  be  learned 
may  be  clear  to  those  who  are  ready  to  engage  in  export  trade. 

The  financing  of  exports  may  be  divided  into  the  following 
divisions : 
j  (a)  Open  credit. 
*  (b)  Draft  against  importer. 
\  (c)  Cash  shipment. 


276 


EXPORTING  TO  THE  WORLD 


StUmg  Goods  on  - 
Op€n  CredH  Basis 

Open  credit  means  a  book  account.  The  merchant  trusts  and 
the  customer  is  supposed  to  pay  when  bills  are  rendered  in 
acccMrdance  witli  a  prevknss  agreement  In  domestic  trade 
open  credit  is  common.  Trading  mider  this  method  is  done 
to  some  extent  in  foreign  trade.  American  exporters,  how- 
ever, are  reluctant  to  grant  open  credit  which  is  in  general 
demand  the  world  over.  Open  credits  make  collections  un- 
certain; risks  are  increased.  Foreign  customers  in  many  in- 
stances do  not  show  the  indinatbn  to  meet  their  obligations 
at  the  stated  time  under  the  open  credit  basis.  Distance  lends 
them  an  air  of  indiflference,  and  they  are  less  susceptible  to 
the  demands  of  their  creditors  than  they  would  be  i£  within 
easy  reach.  The  enforcement  of  prompt  payment  iS  not  an 
easy  task  when  the  buyer  and  seller  are  separated  by  thou- 
sands of  miles,  and  when  cable  toUs  are  high  and  the  mails 
are  very  slow. 

f  Open  credits  may  be  successful,  however,  where  the  Ameri- 
can manufacturer  or  e3q>orter  has  a  branch  establishment  in 

^the  foreign  country  in  which  he  is  operatmg.  It  is  less  diffi- 
cidt  for  iht  resident  representative  to  keep  in  close  touch 
with  his  customers,  and  to  make  his  collections  at  stated  in- 
tervals, and  to  enforce  payments  by  lawful  means  when  cus- 
tomers are  rather  slow  in  remitting.  As  a  matter  of  fact, 
open  credits  are  uniformly  soccessf ul  only  under  such  con- 
ditions, or  when  there  is  a  special  agent  of  the  seller  on  the 
ground  to  see  that  mcmeys  due  are  paid  withm  the  prescribed 
period. 

Cash  Terms  m 
Espari  Traie 

The  general  rule  followed  when  a  new  customer  applies  for 
merchandise  and  terms  in  the  United  States  is  cash  in  New 
York  or  at  any  other  A^ierican  port  There  is  nothing  strange 
abont  this  rule.  It  is  even  f<^lowed  in  the  domestic  business 
where  it  is  quite  difficult  for  a  new  customer  to  buy  merchan- 
dise on  credit  from  a  firm  unless  he  can  produce  a  satisfactory 
commercial  rating.  There  is  no  reason  why  this  rule  should 


HOW  ORDERS  ARE  FINANCED  277. 


be  done  away  with  in  doing  business  with  a  customer  in  a 
foreign  country.  Contrary  to  opinion  this  rule  is  not  pecu- 
liarly American.  The  British,  Germans,  French  and  other  foreign 
tradii^  nations  demand  cash  in  advance  of  shipment  from  cus- 
tomers with  whom  they  have  not  done  business  before  and  those 
who  are  unable  to  produce  adequate  financial  references.  A 
manufacturer  or  exporter  cannot  extend  credit  to  a  person  he 
does  not  know,  and  an  importer  should  not  ask  for  it  until  he 
has  established  himself  in  the  confidence  of  those  from  whom 
he  wishes  to  make  his  purchases. 

There  are  cases,  however,  where  importers  have  very  con- 
scientiously sent  their  cash  in  advance  as  payment  for  ship- 
ments they  expected  within  a  reasonable  time.  Unfortunately, 
they  have  been  compelled  to  wait  months  and  months  for 
their  merchandise,  due  to  the  negligence  of  some  manufac- 
turer or  exporter  in  this  country.  It  is  no  wonder,  therefore, 
that  occasional  criticisms  are  made  against  the  practice  of 
compelling  cash  in  advance  of  shipment  from  import^s.  On 
other  occasions  it  has  been  noted  that  goods  have  been  re- 
ceived at  destination  in  a  damaged  condition  as  the  result  of 
improper  packing.  In  other  instances,  substitutions  have  been 
made,  and  the  injury  has  been  deep.  The  importer  sends  his 
money  in  advance  and  he  esqiects  the  things  he  has  ordered. 
Cash  in  advance  is  demanded,  however,  only  in  cases  where  die 
foreign  importer  is  practically  unknown  to  the  American  ex- 
porter or  where  he  fails  to  submit  proper  financial  credentials.^ 
The  bulk  of  our  foreign  trade  is  done  on  a  credit  basis,  and  the 
machinery  for  these  credit  operations  is  so  simple  that  any  one 
having  the  proper  commercial  rating  and  reputation  may  use 
it 

A  foreign  importer  who  submits  to  the  terms  imposed  upon 
him  by  an  American  exporter  may  be  able  to  make  his  cash 
pajnoient  in  the  following  manner: 

(a)  He  may  send  his  remittance  direct  to  the  exporter. 

(b)  He  may  send  his  remittance  through  the  bank  in  the 
exporter's  coimtry,  against  the  delivery  of  the  necessary 
documents. 

(c)  He  may  send  his  remittance  through  a  local  bank  in 
his  own  territory,  against  the  delivery  of  the  necessary 

documents. 

The  latter  two  methods  of  financing  export  shipments  may 


«78  EXPORTING  TO  THE  WORLD 


be  effected  under  a  banker's  credit  of  which  there  are  many 
forms.  Presently,  we  shall  show  how  the  latest  of  all  meth- 
ods— the  acceptance  credit — may  be  used  by  importers  in 
loreigfi  countries  for  the  purchase  of  their  merchandise  in  the 
United  States.  In  the  meantime  the  opening  of  a  commercial 
credit  must  have  the  reader's  attention/ 

How  Commercial  Credit 
May  Be  Opened  by  Importer 

A  manufacturer  upon  receiving  an  order  from  a  foreign 
customer  with  whom  he  has  never  done  business  before  may 
suggest  to  him  that  his  policy  is  to  obtain  cash  for  his  goods 

Ere  they  leave  the  country,  but  that  arrangements  can 
y  be  made  for  the  nuttual  prolectioa  of  both  buyer  and 
T  for  the  establishment  of  a  commercial  credit  wi^  a 
f  teliable  American  banking  institution  so  that  the  payment  ot 
'  itierchandise  may  be  obtained  upon  the  presentation  of  the 

i^per  papers  by  the  shipper.  This  plan  safeguards  the  im- 
pOTter  who  knows  that  his  money  is  in  good  keq>ing,  as  well 
as  the  manu^icturer  who  knows  that  he  may  obtain  his  cash 
the  minute  he  presents  his  draft  and  necessary  documents  to 
complete  the  transaction.  A  commercial  credit  of  this  kind  is 
j  advisable  only  when  large  sums  of  money  are  involved. 
!  The  importer  who  desires  to  cipen  a  commercial  credit  in 
this  country  may  go  to  his  own  local  banker  and  make  ar- 
rangement for  the  establishment  of  this  credit  with  his  cor- 
respondent in  the  United  States.  Commercial  credits  are 
either  confirmed  or  unconfirmed.  The  local  banker  will  in- 
struct its  correspondent  in  the  United  States  to  pay  certain 
monejrs  to  certain  persons  in  the  United  States  under  certain 
conditions.  If  the  importer  happens  to  be  an  old»  reliable 
customer  of  the  local  banker  he  need  not  put  up  any  money 
for  this  service  immediately,  but  he  may  make  payments  only 
as  the  local  banker  requires.  The  local  banker,  of  course, 
charges  interest  and  a  small  commisskm  for  services  rendered. 

If  the  local  banker  opens  a  confirmed  credit  for  his  client 
in  the  United  States  it  means  that  it  cannot  be  cancelled  dur- 
ing its  life  unless  with  the  consent  of  all  the  parties  thereto; 
the  applicant  for  the  credit,  his  banker,  the  issuing  bank  and 
the  beneficiaiT. 


HOW  ORDERS  ARE  FINANCED  »79 

An  unconfirmed  credit  is  subject  to  revocation  at  any  time 

by  any  of  the  interested  parties,  and  on  this  account  is  not  as 
acceptable  to  beneficiary  as  is  the  confirmed  or  irrevocable 
credit,  particularly  where  merchandise  is  in  process  of  manu- 
facture. The  rate  of  charged  by  a  bank  on  a  con- 
firmed credit  is  slighdy  higher  than  that  charged  on  an  un- 
confirmed credit. 
A  confirmed  or  irrevocable  credit  reads  something  like  this : 
Guaranty  Trust  Company  of  New  York. 

New  York,  October  16th,   . 

To  The  American  Export  Association, 

140  Broadway,  New  York  City. 
Dear  Sir: — 

In  accordance  with  cable  instructions  received  from  Ban- 
co Mercantil  Americano  del  Peru,  Lima,  Peru,  we  open  an 
irrevocable  credit  in  your  favor  for  account  of  The  South 

American  Import  Company,  Lima,  Peru. 

Amount  $100,000  (One  Hundred  Thousand  Dollars) 

covering  shipment  of  General  merchandise  from  New  York 
to  Callao,  Peru. 

Drafts  under  this  letter  of  credit  are  to  be  drawn  at  sight 
on  us  and  arc  to  be  accompanied  by  a  set  of  Shipping  Docu- 
ments of  a  character  which  must  meet  with  our  approval, 
consisting  of: 

Shipper's  invoices 

Consular  invoices  if  such  documents  are  required  in  ccm- 
nection  with  this  shipment. 

Marine  and  War  Risk  insurance  policies. 

Full  set  of  ocean  steamer  Bills  of  Lading  made  out  to  order 
and  endorsed  in  blank,  or  to  the  order  of  the  Banco  Mercantil 
Americano  del  Peru*^ 

This  letter  of  credit  is  valid  only  upon  there  havit^  been 
issued  an  appropriate  Export  License,  covering  the  trans- 
action. 

It  must  be  understood  that  payments  under  this  Credit  will 
only;  be  made  provided  the  goods  are  actually  on  board  or 
loading  on  the  Vessel  named  in  the  B.  of  L. 

If  Government  regulations  restrict  the  issue  of  order  Bills 
of  Lading,  please  communicate  with  us  and  we  will  advise 
you  in  the  premises. 

Marine  insurance  sfiould  cover  from  Warehouse  to  Ware- 


88a  EXPORTING  TO  THE  WORLD 


lioase,  and  not  less  than  ten  days  after  arrival,  and  also  in- 
clude deviation  clause,  craft  and  lighter  clause,  negligence  and 
or  latent  defect  clause.  Policies  reading  Free  of  Particular 
A¥mig«  completely,  miist  not  be  tendered  without  prior  ar- 
rangement with  ua. 

This  letter  of  Credit  is  issued  subject  to  all  rec^ulations  and 
enactments  of  the  United  States  Government  and  its  Allies 
and  to  any  proclamations  of  the  President  governing  export 
shipments. 

The  document  should  be  presented  whenever  possible  in 

time  to  be  forwarded  on  the  steamer  carrying  the  merchandise. 

This  Letter  of  Credit  expires  June  30,  1920. 

If  you  are  unable  to  comply  with  the  terms  as  indicated 
above,  please  communicate  with  us  promptly,  and  oUige, 

Yours  respectfully, 
Guaranty  Trust  Company  of  New  York. 

The  confirmed  credit  differs  from  the  unconfirmed  or  re- 
vocable export  credit  in  that,  as  an  irrevocable  credit,  it  can- 
not be  cancelled  prior  to  the  date  specified  in  the  credit  with- 
out the  cmisent  of  the  four  parties  thereto. 

Commercial 
Letters  of  CredU 

When  the  shq»per  presents  the  necessary  papers  to  the 
bank  and  complies  with  all  the  conditions  under  a  commercial 
credit  he  receives  his  cash  immediately.  This  kind  of  trans- 
action is  generally  called  a  cash  credit  and  opposed  to  it  is  the 
time  credit  which  is  drawn  for  a  longer  period  and  is  covered 
by  a  commercial  letter  of  credit  The  commercial  letter  of 
credit  authorizes  an  exporter  or  manufacturer  to  draw  a  draft 
imder  certain  conditions  against  an  importer  for  merchandise 
he  has  sold.  The  letter  may  be  addressed  direct  to  the  ship- 
pers or  to  the  bank.  When  addressed  to  the  shippers  it  reads 
something  like  this: 

**You  arc  authorized  to  draw  upon  The  International  Bank 
in  (name  of  city)  under  the  following  conditions." 

When  the  letter  of  credit  is  addressed  to  the  bank  it  simply 
authorizes  it  in  writing  to  accept  the  drafts  of  the  shipper 
under  certain  conditions.  If  the  letter  <^  credit  is  confirn^ed 
to  the  shipper  by  the  banker  then  the  shipper  has  no  further 


HOW  ORDERS  ARE  FINANCED  281 


responsibility  in  the  matter.  No  recourse  can  be  had  on  him 
even  if  the  importer  fails.  The  banker  alone  is  responsible 
now,  and  he  is  fully  secured  by  the  bill  of  lading  and  other 
papers  made  out  to  his  order  and  which  he  sends  to  the  foreign 
local  bank  with  the  draft  for  collection  under  terms  that  the 
local  bank  has  arranged  with  the  customer..  The  customer 
pays  the  local  bank  which  remits  the  money  to  the  American 
instituticm  in  time  to  meet  the  draft  at  maturity. 

The  agreement  between  the  bank  and  the  person  for  whom  \ 
the  letter  of  credit  is  drawn  virtually  provides  that  the  latter's 
drafts  will  be  duly  honored  upon  presentation  and  under  the 
conditions  upon  which  the  credit  was  given.  There  is  a  time 
limit  to  these  letters,  usually;  also  provision  is  made  that  all 
drafts  against  the  credit  be  accompanied  by  the  customary 
documents  such  as  the  bill  of  lading,  insurance  certificates, 
invoices,  etc. 

Batik  Connections 
Determine  Farm  of  Credit 

The  form  of  the  credit  is  usually  determined  by  the  char- 
acter of  the  banking  connections  of  the  importer.  The  rates 
of  exchange  between  one  country  and  another  may  also  de- 
termine its  form.  The  importer  need  not  always  open  up  a 
credit  through  his  local  bank.  He  may  open  credit  directly 
in  the  exporter's  market  if  his  financial  standing  is  satisfactory, 
thereby  dispensing  with  the  local  bank  and  the  necessity  of 
paying  an  extra  commission. 

The  operation  of  these  commercial  credits  when  made  avail- 
able in  this  country  is  described  in  a  "Handbook  of  Finance 
and  Trade  with  South  America"  issued  by  the  National  City 
Bank  of  New  York  as  follows : 

"Our  branch  or  correspondent  in  foreign  country  through 
which  credit  is  established,  informs  us  of  the  opening  of 
Credit,  and  we  in  turn  inform  the  beneficiary  that  credit  has 
been  established  by  foreign  firm  in  his  favor,  and  also  the 
amount  and  the  conditions  under  which  we  will  make  pay- 
ments or  accept  drafts  drawn  thereunder. 

"Many  lai^e  purchases  are  e£Fected  through  this  medium, 
through  credits  of  this  nature  being  arranged  not  only  by 
South  American  firms  in  favor  of  firms  in  the  United  States, 


m  EXPORTING  TO  THE  WORLD 


but  also  by  Americaii  fimis  in  favor  of  South  American  and 

European  houses. 

"In  cases  where  the  foreign  merchant  does  not  open  a  com- 
mercial credit  to  cover  his  merchandise  purchases  in  tliis 
country,  payment  is  usually  effected  through  the  medium  of 
draft  which  is  forwarded  for  collection,  either  with  or  without 
shipping  and  other  documents,  to  our  foreign  branches  or  cor- 
respondent banks/* 

How  Revotvmg  CredU 
Moy  Be  Effected 

Reference  to  a  Revolving  Credit  is  also  made  in  the  hand- 
book.  It  says: 

"Where  the  <^>erations  between  two  parttei  in  different 
countries  are  to  be  more  or  less  continuous,  a  convenient  and 

economical  form  of  credit,  known  as  a  revolving  credit,  may 
be  established. 

"Under  this  form  of  credit  once  the  conditions  are  agreed 
tapoa  they  may  be  made  permanent  for  future  credits  by 
simply  embodying  the  conditions  under  which  the  amounts 

may  again  become  available.  Through  the  medium  of  a  credit 
of  this  nature,  as  the  amounts  drawn  thereunder  are  liquidated 
they  again  become  available  under  the  conditions  of  the  orig- 
inal credit  without  the  necessatj  of  further  cabllqg  or  oor- 
respondence. 

•Revolving  credits  may  be  divided  into  three  forms.  To 

illustrate : 

"A  in  foreign  country  opens  a  credit  in  favor  of  B  in  this 
country  up  to  say  $20,000,  the  conditions  of  which  permit  B 
to*  draw,  as  shipments  are  made,  upon  bank  through  which 
credit  is  made  available,  the  said  bank  honoring  such  drafts 
when  accompanied  by  documents  covering  a  specific  ship- 
ment Upon  liquidation  by  A  of  the  amount  or  amounts 
drawn  by  the  amount  or  amounts  so  liquidated  again  be- 
come available  to  be  drawn  against  by  B  under  the  original 
conditions.  Should  the  total  amount  of  the  credit  become 
exhausted,  no  further  drawings  thereunder  may  be  made  by 
B  until  liquidation  by  A  of  all  or  a  portion  of  the  drafts  drawn 
by  B.  This  explains  the  revolving  feature  of  this  credit,  in- 
asmuch as  the  full  credits  or  sudi  poftions  thereol  aa  have 


HOW  ORDERS  ARE  FINANCED  283  ' 


been  liquidated  by  A,  again  become  automatically  available 
to  be  drawn  against  by  B. 

**The  second  class  of  credit  under  this  revolving  form  per- 
mits B  upon  A's  instructions  to  the  bank,  to  draw  a  specified 
sum  in  one  draft.  Upon  maturity  and  payment  of  this  draft 
by  A,  the  same  amount  again  become  available  to  be  drawn 
against  by  B  upon  the  same  conditbns  which  governed  the 
original  drawing. 

"Under  the  third  class  of  revolving  credit,  A  in  a  foreign 
country  permits  B  in  this  country  to  draw  in  one  draft  for 
the  full  amount  involved,  whereupon  the  credit  again  becomes 
automatically  available  for  a  similar  amount  and  so  on  in- 
definitely until  the  expiratwn  of  the  time  Hmit  specified  in 
the  original  instructions. 

"This  last  form  of  credit  is  limited  as  to  time,  but  as  to  the 
amounts  drawn  thereunder  it  is  only  limited  as  the  unit  in 


   j 

ma< 

amount  which  may  be  drawn  thereunder. 
**It  is  also  possible  to  limit  drawings  to  a  certain  amount 
during  specified  period,  to  be  drawn  in  one  or  in  various 
drafts,  the  original  amount  again  becoming  available  at  the 
expiration  of  each  of  such  periods. 

**The  revolving  credit  is  very  elastic  in  its  application  and 
may  be  made  to  serve  any  reasonable  requirements  along  the 
lines  suggested  in  the  illustrations.  Furthermore,  it  should 
be  noted  that  the  commission  charged  by  the  bank  is  calcu- 
lated not  upon  the  full  amount  for  which  the  credit  is  original- 
ly opened,  but  upon  the  amount  or  amounts  as  availed  of 
tiieiei 


Opening  of  Commercial 
Credit  Illustrated 


The  Natbnal  Gty  Bank's  Handbook  of  Finance  and  Trade 
with  South  America,  presents  a  very  concise  illustration  of 
a  complete  transaction  involved  in  the  opening  up  of  a  com- 
mercial credit.  The  bank  traces  the  transaction  from  the 
opening  of  the  credit  to  the  payment  to  be  made  under  its 
terms.  It  is  as  follows: 

"A  merdiant  in  Argentina,  we  will  say,  has  ortiered  a  quan- 
tity of  machinery  from  a  Chicago  house.  As  the  Chicago  house 


'  284 


EXPORTING  TO  THE  WORLD 


is  not  familiar  with  the  credit  stancling^  of  the  Buenos  Aires 
£rm,  let  us  suppose  that  the  information  in  our  credit  &les  and 
our  clients,  is  not,  in  this  instance,  of  a  natiue  to 
warrant  the  extension  of  time.  The  Chicago  bouse  thereupon 
cables  the  Argentine  merchant  that  order  will  be  entered  if  a 
confirmed  commercial  credit  is  opened  in  their  favor  through 
The  National  City  Bank. 

''A  confirmed  credit  is  required  in  this  instance,  because 
the  machineiy  may  be  of  special  manufacture,  and  the  Chicago 
house,  before  commencing  work  upon  it,  wishes  to  be  secured 
against  a  possible  revocation  of  the  order  when  perhaps  the 
machinery  is  half  completed. 

"The  Buenos  Aires  merchant,  acquiescing  in  the  demand  of 
the  Chicago  house,  arranges  with  the  Buenos  Aires  branch  of 
the  National  City  Bank  of  New  York  for  the  opening  of,  say, 
a  §20,000  confirmed  credit,  to  be  availed  of  through  the  head 
office  of  the  Bank  in  New  York. 

^The  Chicago  house  is  made  the  beneficiary  under  this 
credit,  which  is  practically  an  order  on  the  New  York  office 
of  the  bank,  either  by  cable  or  letter  to  pay  to  the  Chicago 
house  the  amount  stipulated,  generally  upon  delivery  to  the 
bank  of  a  full  set  of  shipping  documents  covering  the  ship- 
ment. If  the  credit  were  an  'acceptance  credit,'  the  New  York 
office  of  the  bank  would  'accept*  the  draft  of  the  Chicago  house 
for,  say  thirty,  sixty,  or  ninety  days,  as  may  have  been  agreed 
upon.  Upon  receipt  at  New  York  of  either  the  cable  or 
letter  opening  the  credit,  the  Bank  at  New  York  immediately 
notifies  the  beneficiary  (the  Chicago  house  in  this  instance) 
that  such  credit  has  been  opened  and  the  conditions  upon 
iNdiich  payments  thereunder  will  be  made.  It  will  be  noted 
upon  reference  to  the  definition  of  a  'confirmed  credit*  that 
this  kind  of  credit  can  be  revoked  only  with  the  consent  of 
the  four  parties  concerned,  viz.,  the  Buenos  Aires  merchant, 
the  Buenos  Aires  branch  of  the  National  City  Bank  of  New 
York,  the  New  York  office  of  the  National  Gty  Bank  of  New 
York,  and  the  beneficiary  at  Chicago. 

Chicago  House  Prepares 
ia  Make  CMecikm 

"The  machinery  having  been  completed,  the  Chicago  house 


HOW  ORDERS  ARE  FINANCED  285 


consigns  it  on  a  railroad  bill  of  lading,  to  its  New  York  agent, 
or,  in  the  absence  of  a  New  York  agent,  then  to  some  reput- 
able forwarding  house  at  New  York,  the  shipping  port,  with 
instructions  to  secure  the  ocean  bills  of  lading.  Consular  In- 
voice, insurance  certificates,  jtnd  other  necessary  documents. 
These  documents  are  thereupon  presented  to  the  bank,  and  if 
they  are  in  order  and  meet  the  requirements  of  the  credit, 
payment  will  be  made  by  the  bank,  usually  through  the  medi- 
um of  a  bank  check  to  the  order  of  tfatf  beneficiary^  If,  how- 
ever, beneficiary  is  a  depositor  of  the  bank,  it  is  probable  that 
the  amount  will  simply  be  credited  to  his  account. 

••The  bills  of  lading  are  generally  made  out  *to  order'  and 
are  endorsed  in  blank  by  shipper,  after  which  they  are  for- 
warded to  our  Buenos  Aires  branch.  To  order*  bills  of  lading, 
however,  are  not  permissible  to  Venezuela  and  Colombia,  to 
which  countries  it  is  necessary  to  consign  documents  and 
merchandise  direct  to  the  consignee.  More  care  is  therefore 
necessary  in  looking  into  the  credit  standing  of  consignees  in 
those  countries* 

••It  wiU  be  noted  in  the  transaction  we  are  following  that  as 
the  bills  of  lading  have  been  made  out  'to  order'  and  endorsed 
in  blank,  the  bank,  having  possession  of  the  documents,  prac- 
tically controls  the  shipment,  and  the  Buenos  Aires  branch 
will  only  sttrrender  these  evidences  of  title,  which  we  wiU 
assume  have  gone  along  on  the  same  steamer  carrying  the 
shipment,  upon  compliance  by  the  purchaser  in  Argentina 
with  whatever  conditions  were  agreed  upon  in  the  undertaking 
creating  the  credit.  These  conditions  may  take  various  fcmns. 
If  the  credit  standing  of  the  Aigentine  merchant  is  beyond 
question,  it  is  possible  that  he  has  established  with  our  branch 
a  line  of  credit  to  cover  his  commercial  credit  operations,  in 
which  event  the  documents  may  be  surrendered  to  him  with- 
out collateral  security  being  placed  with  our  branch  bank. 

''Should  security  be  deemed  advisable,  however,  this  may 
^dre  various  forms,  such  as,  depositing  with  the  branch  ac- 
ceptable securities  (bonds  or  stocks)  until  liquidation  of  the 
obligation,  or  perhaps,  the  depositing  of  a  note  bearing  the 
endorsement  of  a  responsible  individual  or  firm.  It  may  have 
been  agreed  that  such  surrender  is  to  be  made  upon  accept- 
ance by  the  Argentine  merchant  of  a  draft  to  be  drawn  upon 
him  for  an  agreed  tenor  by  our  Buenos  Aires  branch.  It  may 


S86  EXBORTiNG  TO  THE  WORLD 


alao  take  the  form  of  a  trust  receipt  to  be  deUvered  to  the 

branch  by  the  Argentine  merchant,  under  which  title  to  the 
merchandise  remains  in  the  name  of  the  bank,  the  proceeds 
of  partial  sales  to  be  turned  over  by  merchant  to  the  branch 
until  complete  liquidation  erf  the  transaction.  There  is  usually 
more  form  than  substance  to  a  trust  receipt,  however,  as  once 
the  merchandise  has  been  placed  in  the  warehouse  of  the 
purchaser  it  is  not  an  ea^  matter,  in  fact  it  is  practically  im- 
possible in  most  instances,  to  have  it  so  earmarked  as  to  keep 
it  safely  guarded  from  other  merchandise  for  identification  in 
the  event  of  default  or  other  impediment  arising. 

'It  is  possible  that  the  conditions  of  the  credit,  owing  to 
the  financial  and  credit  standing  of  the  Argentme  merchant, 
may  be  broad  enough  to  permit  of  the  documents  being  for- 
warded direct  to  the  Argentine  merchant  by  the  shipper  in  the 
States,  in  which  casct  such  documents  should  be  made  out  to 
his  order  direct* 

*'In  the  case  of  an  acceptance  credit,  the  draft  drawn  upon 
the  bank  by  the  beneficiary  (in  this  instance  the  merchant  in 
Chicago),  will  be  accepted  by  the  head  office  of  the  bank  in 
New  York,  under  the  Federal  Reserve  Act  which  grants  to 
national  banks  the  privilege  of  accepting  bills  of  exchange 
growing  out  of  transactions  involving  the  importation  and 
exportation  of  goods.  This  acceptance  usually  takes  the  form 
of  a  stamp  across  the  face  of  the  draft  with  the  word  "ac- 
cepted' and  the  date,  with  the  signature  of  a  duly  authorized 
officer  of  the  accepting  bank,  and  will  there  upon  be  detached 
from  the  other  documents  for  return  to  the  Chicago  firm,  to 
be  discounted  by  them  immediately,  if  they  prefer,  or  to  be 
bdd  by  them  until  maturity  date  tiiereof . 

•Tfn  tfie  case  of  the  acceptance  credit  the  conditions  at 
Buenos  Aires  under  which  credit  was  originally  opened  quite 
likely  specify  that  payment  is  to  be  made  some  days  prior  to 
the  actual  maturity  date  of  acceptance  at  New  York,  through 
the  medium  of  a  draft  to  be  drawn  by  our  Buenos  Aires 
branch  upon  the  Argentine  importer.  This  draft  is  given  an 
earlier  maturity  date  than  the  Chicago  draft  in  order  to  en- 
able the  Buenos  Aires  branch  of  the  bank  to  cable  ftmds  to 
New  York  in  time  for  the  New  York  office  to  meet  its  ao- 
e^taace  of  the  dnit  ol  the  Chacago  hom^ 


d 

HOW  ORDERS  ARE  FINANCED    it  287 


Difference  Between  Confirmed 
Documentary  CredU  and  Acceptance  Credit 

"One  of  the  points  of  difference  between  the  ordinary  con- 
firmed documentary  credit  and  the  acceptance  credit  is  that 
under  the  former  it  is  not  always  necessary  for  the  American 
shipper  to  draw  drafts,  the  conditions  of  the  credit  usually 
instructing  the  bank  to  pay  cash  i^inst  receipt  of  documents, 
the*bank  taking  simply  the  receipt  of  the  shipper  for  payments 
made  thereunder.  This  receipt  may  consist  of  the  simple  en- 
dorsement of  beneficiary  on  the  bank's  check  for  the  amount 
involved.  Under  the  acceptance  credit,  however,  the  instruc- 
tions from  the  bank  through  which  the  credit  was  originally 
opened  to  the  bank  through  which  it  is  to  be  made  available, 
would  be  to  accept  the  draft  of  the  American  shipper,  under 
certain  specified  conditions,  such  acceptance  by  bank  protect- 
ing the  maker  of  draft  in  the  event  of  the  Argentine  merchant 
becoming  insolvent  before  maturity  date,  the  recourse  of  the 
New  York  bank  under  such  a  contingency  to  be  had  to  the 
foreign  bank  which  originally  opened  the  credit." 

Partial  Payment  in 
Advance  Often  Made 

The  manufacturer  or  exporter  should  beware  of  partial  pay- 
ments in  advance.  They  may  find  themselves  in  considerable 
trouble  in  attempting  to  collect  the  balance.  American  mer- 
chants often  find  themselves  in  this  predicament  in  dealii^ 
with  foreign  customers.  Before  permitting  merchandise  to 
leave  the  country  on  this  basis  the  shipper  should  know  some- 
thing about  the  responsibility  of  the  importer.  The  fact  that 
he  has  made  a  partial  payment  on  the  goods  does  not  fully 
protect  the  manufacturer.  There  have  been  histances  where 
partial  payments  have  been  made,  the  goods  shipped,  rejected 
at  the  other  end,  and  finally  sold  at  auction,  the  original  buyer 
bidding  in  an  eactremely  low  price  for  the  consignment.  When 
ever  a  shipper  is  willing  to  permit  his  merchandise  to  leave 
the  country  on  a  partial  payment  basis  he  should  protect  him- 
self to  the  extent  of  demanding  that  the  initial  payment  shall 
cover      enthre  coats  of  getting  the^goods  back  to  the  point 


288  EXPORTING  TO  THE  WORl-D 


of  <»%iii  in  case  the  customer  fciuses  to  accept  them  at  the 
port  of  destination. 

The  Acceptance  Credit 
m  Foreign  Cammeree 

The  Federal  Reserve  Act  authorizes  member  banks  to  ac« 
cept  drafts  drawn  upon  them  arising  out  of  commercial  trans- 
actions  involving  the  importation  or  eaeportation  of  goods 
having  not  more  than  six  months  to  run.  The  establishment 
of  an  open  discount  market  in  this  country  in  which  bills 
of  exchange  may  be  bought  and  sold  is  the  natural  result  of 
this  authority  under  the  Act. 
The  acceptance  system  operates  something  like  this: 
A  foreign  buyer  wishing  to  purchase  goods  in  the  United 
States,  and  requested  by  the  exporter  to  arrange  a  bank  credit 
against  which  he  may  draw  when  the  shipment  is  made,  may 
arrange  with  his  local  bank  for  this  credit.  The  local  bank  in 
turn  gets  in  touch  with  its  American  correspondent  and  asks 
it  to  open  a  credit  in  favor  of  the  American  esqxnrter  and  to 
be  drawn  i^^ainst  under  certain  conditions. 

The  American  exporter  ships  the  goods  and  then  goes  to 
the  American  bank  with  the  bill  of  lading  and  other  neces- 
sary documents  with  draft  attached,  and  presents  the  latter 
to  the  bank  for  acceptance.  The  American  bank  stan^>s 
''accepted"  <m  the  lace  of  the  draft,  returns  it  to  the  exporter, 
and  forwards  the  shipping  documents  by  first  mail  to  its  for- 
eign correspondent.  The  foreign  bank  may  turn  these  docu- 
ments over  to  its  client  against  such  security  as  the  bank  may 
deem  adequate.  The  foreign  bank  furnishes  the  funds  to  the 
American  bank  to  meet  the  draft  wtnamtr  it  is  due. 

The  American  shipper  who  now  has  in  his  possession  a 
bank  acceptance  may  do  either  of  two  things  with  this  paper: 
He  may  discount  it  with  his  own  bank,  or  he  may  go  into  the 
open  discount  market  and  obtain  his  money  for  it— which 
will  be  the  ruling  rate  for  member  bank  accqitanees. 
The  advantages  of  the  acceptance  credit  are: 
j  The  American  exporter  is  able  to  extend  his  customer 
abroad  "time"  at  the  lowest  cost  possible.  The  exporter  knows 
that  he  can  sell  the  acceptance  from  an  American  bank  at  the 


HOW  ORDERS.  ARE  FINANCED  ^89 


lowest  possible  rate,  and  acoordiiiglyy  adds  a  small  percent- 
age to  his  selling  price  in  order  to  cover  himself  for  this 

nominal  discount 

Acceptance  credits  may  be  empk^ed  in  anticipation  of 
actual  exports.    A  merchant  having  a  large  cnrder  from  a 

foreign  customer  may,  upon  making  arrangements  with  his 
bank,  draw  a  long  draft  on  the  latter,  and  thereby  use  the 
funds  thus  created  for  the  purchase  or  preparation  of  the 
shipment.  After  ^e  shipment  has  been  made,  the  draft  on  the 
foreign  purchaser  or  the  foreign  purchaser's  bank,  together 
with  the  shipping  documents,  are  turned  over  to  the  bank, 
for  discount  or  collection,  the  bank  in  turn  using  the  pro- 
ceeds of  this  draft  in  liquidation  of  the  original  acceptance. 

The  Draft,  or  Foreigm 
BiU  of  Exckmge 

The  foreign  bill  of  exchange  or  draft,  as  it  is  commonly 
called,  is  an  instrument  very  well  known  in  foreign  trade.  It 
is  an  unconditional  order  in  writing  addressed  by  one  person 
to  another,  sigrod  by  the  person  giving  it  and  rpxivaxmg  the 
person  to  whom  it  is  addressed  to  pay  on  demand  or  at  a  fixed 
or  determinable  future  time  a  sum  in  money  to,  or  to  the 
order  of  a  i^edfied  person  or  bearer. 

The  financing  of  shipments  by  draft  is  briefly  explained  by 
the  National  City  Bank's  Handbook  as  follows: 

"Now  let  us  consider  the  shipment  from  Chicago  as  one  for 
which  a  commercial  credit  had  not  been  opened,  the  conditions 
of  the  order  as  placed  stating  that  draft  is  to  be  drawn  by 
shipper  on  the  Argentine  buyer  either  at  sight,  or  say  at 
sixty,  or  nine^  days  sight. 

"As  in  the  case  of  the  acceptance  or  confirmed  credit,  tqpon 
completion  of  the  machinery  and  its  shipment  to  New  York, 
the  forwarding  agent  in  the  latter  city,  acting  under  instruc- 
tions from  the  Chicago  shipper,  will  have  secured  the  neces- 
sary documents.  Draft,  made  pajrable  to  the  National  City 
Bank  of  New  York  covering  the  invoice  value  of  the  shipment, 
plus  charges  to  be  included,  having  likewise  been  forwarded 
to  the  New  York  agenl*  will  be  presented  by  him  with  the 


290  EXPORTING  TO  THE  WORLD 


complete  set  of  docmnettts  to  the  New  York  office  d  the 

National  City  Bank. 

"It  is  possible  that  the  Chicago  merchant  has  had  a  line  of 
credit  established  with  this  bank  for  the  discount  of  his 
foreign  drafts,  in  which  event,  if  draft  is  discounted,  the  ac- 
count of  the  Chicago  house  with  the  bank  will  now  be  credited 
with  the  proceeds,  or,  if  we  are  so  instructed,  with  its  full  face 
value.  This  latter,  however,  is  advisable  only  where  an  under- 
handing  has  previously  been  had  between  the  shipper  and 
foreign  client  whereby  the  latter  understands  that  he  is  to 
pAj  the  interest  and  charges  involved  in  this  procedure. 

Documents  Must 
Accompany  Draft 

"Whether  draft  is  for  collection  or  discount  it  will  be  for- 
warded with  the  complete  set  of  documents  to  our  Buenos 
Aires  branch  for  collection.  Upon  arrival  of  the  documents 
at  Buenos  Aires,  our  branch  there  will  immediately  advise  the 
Buenos  Aires  merchant.  The  documents  in  this  case,  as  in 
the  case  of  the  acceptance  credit,  are  quite  probably  to  *order' 
and  will  be  surrendered  to  foreign  client  only  upon  compliance 
by  him  with  whatever  instmctkms  we  have  received  in  this 
respect  from  the  Chicago  shipper.  If  the  draft  be  a  sight 
draft,  documents  will  be  surrendered  upon  payment.  If,  how- 
ever, it  be  a  time  draft,  the  custom  in  South  American  coun- 
tries is  to  surrender  documents  upon  acceptance  of  the  draft 
by  foreign  dient.  In  the  case  of  a  8%ht  draft,  drawn  in 
dollars,  tiie  New  York  funds  paid  against  the  surrender  of 
documents  will  be  immediately  forwarded  to  our  New  York 
otHce,  where,  if  draft  was  not  originally  discounted  for  the 
Chicago  firm,  the  proceeds  will  be  placed  to  the  credit  of  their 
account.  If,  however,  draft  is  a  time  draft,  the  accepted 
draft  will  be  hdd  at  ocnr  Argentine  branch  until  maturity,  at 
which  time,  upon  pa3rmcnt  being  effected,  remittance  will  be 
made  to  New  York  by  the  Buenos  Aires  branch  as  in  the  case 
of  the  sight  draft." 

Drafts  Ckm  or 
Docwmmtmry 

Drafts  n  lay  be  clean  or  th^  may  be  documentary.  When 


HOW  ORDERS  ARE  FINANCED  291 


documentary  they  are  accompanied  by  bill  of  lading,  insur- 
ance certificates  or  any  other  instruments  necessary  to  estab- 
lish title  to  the  merchandise.  When  clean  they  are  unac- 
companied by  any  papers  except  duplicates  of  original  docu- 
ments. These  drafts  are  usually  handled  through  third  parties 
the  bankers  almost  always  being  the  third  parties. 

Foreign  drafts  are  always  drawn  in  duplicate,  known  as 
the  First  of  Exchange  and  the  Second  of  Exchange.  When 
one  is  honored  the  other  becomes  void.  Drafts  are  drawn 
in  duplicate  as  a  matter  of  safety  in  transmitting  them 
through  the  mails  to  foreign  countries.  If  one  is  lost  there 
Is  a  chance  that  the  second  one  will  reach  its  destination. 
It  is  customary  for  drafts  to  be  drawn  to  "the  order  of  our- 
selves" instead  of  to  some  specified  payee.  This  plan  per- 
mits greater  freedom  in  the  negotiability  of  these  instru- 
ments. When  drafts  are  sent  by  shippers  to  foreign  banks 
for  collection^  however,  they  are  either  made  pa3rable  to  the 
bankers  or  endorsed  to  them.  It  must  be  remembered  that 
all  drafts  payable  to  the  order  of  the  drawer  must  be  endorsed 
by  him  before  they  may  be  negotiated  by  anyone  else. 

Drafts  may  be  drawn  at  sight  or  they  may  be  drawn  at 
30,  80  or  90  days  after  sight  A  sight  draft  is  <me  payaUe 
on  sight,  or  upon  presentation  to  the  drawee.  This  is  the 
usual  rule  although  in  different  countries  varied  regulations 
are  encountered  as  to  the  proper  time  to  present  sight  drafts. 
In  some  countries  it  is  illegal  to  present  sight  drafts  for  col- 
lection until  the  bankers  have  in  their  possession  duplicate 
s^t  drafts  and  a  complete  set  of  all  documents.  Some 
shippers  having  some  consideration  for  their  consignees 
usually  draw  sight  drafts  at  from  three  to  fifteen  days  at 
sight  in  order  to  give  their  customers  ample  time  to  pay 
them. 

Time  drafts  may  be  drawn  anywhere  from  seven  days  to 

ninety  days  or  more,  after  sight.  Evidence  that  the  bill  has 
been  presented  to  the  drawee  is  obtained  by  notation  of  the 
actual  date  when  the  bill  is  presented.  The  mere  showing  of 
the  bill  to  the  consignee  is  not  enough,  according  to  the  law. 

The  American  manufacturer  has  two  methods  of  collecting 
his  money  by  draft.  He  may  present  it  to  the  banker  at  home 
Avho  in  turn  will  send  it  together  with  the  necessary  docu- 
ments to  his  correspondents  abroad  with  instructions  as  to 


292  EXPORTING  TO  THE  WORLD 


collecti<Mi»  or  he  may  send  the  draft  together  with  odier 
docnments  to  some  reputable  banker  in  the  foreign  country 
in  which  collection  is  to  be  made  with  instructions  to  th^ 
foreign  banker  to  collect. 

Drafts  may  be  Sold 
Immediately  to  Bankers 

A  shipper  who  may  not  wish  to  tie  up  his  capital  untfl  the 
return  of  the  money  invohred  in  a  foreign  sale  may  sell  his 
draft  directly  to  his  local  banker.  This  is  often  done  in  the 
case  of  small  manufacturers  and  exporters  who  are  unable 
to  place  their  capital  in  such  position.  It  is  a  common  prac- 
tice, however,  with  large  manufacturers  and  exporters  who 
have  sufficient  funds  to  enable  them  to  wait  for  several  weeks 
or  possibly  months  for  remittances  from  abroad. 

The  purchase  and  sale  of  foreign  bills  of  exchange,  or 
drafts,  is  a  function  assumed  by  what  are  known  as  interna- 
tional bankers,  although  the  laiger  American  banking  insti- 
tutions at  this  date  have  r^^ukrly  organized  foreign  depart- 
ments in  which  this  sort  of  business  is  carried  on  in  large 
volume. 

Foreign  departments  in  American  banks— particularly  in 
national  banks— are  comparatively  new  things.   They  were 
practically  unknown  a  few  years  ago  when  our  foreign  trade 
was  not  so  interesting  as  it  is  at  the  present  moment.  It  was 
difficult  a  few  years  ago  to  n^tiate  bills  of  exchange  with 
banks  that  did  not  take  this  kind  of  business,  and  naturally 
many  of  these  banks  lost  this  kind  of  business  to  other  institu- 
tions that  were  more  thoroughly  equipped  to  handle  all  kinds 
of  foreign  transactions  in  which  the  assistance  of  banks  was 
absolutely  necessary.  The  importance  of  this  branch  of  bank- 
ing, however,  was  soon  recognized  and  now  we  have  all  our 
great  financial  institutions  engaged  in  foreign  banking,  and 
thoroughly  competent  to  assist  American  manufacturers  and 
exporters  in  the  business  of  financing  their  shipments  to  every 
comer  of  the  globe. 

Haw  Foreign  Exchange 
Bemker  Operates 

The  foreign  exchange  banker  thrives  on  the  purchase  and 


292  EXPORTING  TO  THE  WORLD 


coUectioii^  or  he  may  send  the  drafl  together  with  other 
documents  to  some  reputable  banker  in  the  foreign  country 

in  which  collection  is  to  be  made  with  instructions  to  thq 
foreign  banker  to  collect. 

Drafts  may  be  Sold 
immediaiely  ta  Bankirs 

A  shipper  who  may  not  wish  to  tie  op  his  capital  until  the 

return  of  the  money  involved  in  a  foreign  sale  may  sell  his 
draft  directly  to  his  local  banker.  This  is  often  done  in  the 
case  of  small  manufacturers  and  exporters  who  are  unable 
to  place  their  capital  in  such  position.  It  is  a  common  prac- 
tice, however,  with  large  manufocturers  and  exporters  who 
have  sufficient  funds  to  enable  them  to  wait  for  several  weeks 
or  possibly  months  for  remittances  from  abroad. 

The  purchase  and  sale  of  foreign  bills  of  exchange,  or 
drafts,  is  a  function  assumed  by  what  are  known  as  interna- 
tional bankers,  although  the  larger  American  banking  insti- 
tutions at  this  date  have  r^fularly  organized  foreign  depart- 
ments in  which  this  sort  of  business  is  carried  on  in  laxge 
volume. 

Foreign  departments  in  American  banks — ^particularly  in 
national  banks— are  comparatively  new  things.  They  were 
practically  unknown  a  few  years  ago  when  our  foreign  trade 

was  not  so  interesting  as  it  is  at  the  present  moment.  It  was 
difficult  a  few  years  ago  to  negotiate  bills  of  exchange  with 
banks  that  did  not  take  this  kind  of  business,  and  naturally 
many  of  these  banks  lost  this  kind  of  business  to  other  institu- 
tions that  were  more  thoroughly  equipped  to  handle  all  kinds 
of  foreign  transactions  in  which  the  assistance  of  banks  was 
absolutely  necessary.  The  importance  of  this  branch  of  bank- 
ing, however,  was  soon  rccoq^nized  and  now  we  have  all  our 
great  financial  institutions  engaged  in  foreign  banking,  and 
thoroughly  competent  to  assist  American  manufacturers  and 
exporters  in  the  business  of  financing  their  shipments  to  every 
comer  of  the  globe. 

How  Foreign  Exchange 
Banker  Operates 

The  foreign  exchange  banker  thrives  on  the  purchase  and 


^P^n,  g6th 


SANTIAGO.  CHILE. 


HOW  ORDERS  ARE  FINANCED.  203 


sale  of  drafts.  If  the  customer's  rating  is  satisfactory  there 
will  be  no  trouble  in  selling  a  draft  even  though  he  may  be 
unknown  to  the  banker.  The  latter  must  look  into  the  cus- 
itomer's  financial  standing,  of  course,  to  protect  himself 
in  case  the  draft  returns  unhonored  from  a  foreign  country. 
Recourse,  it  must  be  remembered,  is  had  on  the  maker  of  the 
draft.  Not  only  must  he  refund  the  money  obtained  from 
the  bank  but  he  must  also  pay  the  costs  which  may  have 
accrued  in  its  attempted  collection. 

Another  factor  that  determines  the  banker's  decision  in 
the  matter  of  buying  a  draft  is  the  character  of  the  merchan- 
dise shipped  under  the  bill  of  lading.  Articles  for  which  there 
is  a  constant  demand  are  safer  from  the  standpoint  of  realizing 
on  their  value  than  novelties  or  specialities.  Drafts  drawn 
against  grain,  cotton  or  sugar  are  more  acceptable  to  bankers 
tlian  drafts  drawn  against  automobiles,  typewriters  or  certain 
kinds  of  machinery.  Grain,  cotton  or  sugar  can  be  readily- 
disposed  of  at  a  satisfactory  price  while  there  is  always  a  risk 
in  holding  automobiles  or  machineiy  for  sale. 

How  Foreign  Drafts 
Are  Negotiated 

The  mechanics  of  n^tiating  a  draft  are  something  like 
this: 

The  shipper  asks  his  foreign  exchange  bankers  to  quote  on 
his  drafts  just  before  the  shipment  is  ready  to  be  sent,  and 
when  the  value  of  the  invoice  is  known.  In  asking  for  quota- 
tions on  these  drafts  the  shipper  gives  full  particulars  as  to 
terms,  the  nature  of  the  merchandise,  the  name  of  the  con- 
signee, and  other  information  that  the  banker  may  require 
If  the  draft  is  to  be  written  in  foreign  money  the  shipper 
usually  asks  the  banker  for  the  rate  of  exchange  before  writ- 
ing out  the  instrument.  He  does  this  in  order  to  write  the 
equivalent  amount  of  American  dollars  in  the  foreign  cur- 
rency of  the  country  to  which  he  is  sending  the  draft.  If  the 
draft  is  to  be  drawn  in  dollars  the  shipper  may  desire  to  know 
what  the  bank's  charges  as  to  commission,  interest,  etc.,  may 
be  so  that  he  can  add  it  to  the  invoice.  The  total  is  then 
written  into  the  draft 

As  has  ah*eady  been  mentioned,  when  the  draft  is  sold  the 


A  « 

4ij  ' 


I 


#1 


EXPORTING  TO  THE  WORLD 


iinderstandii^  is  that  the  responsibility  for  a  refund  hi  case 

the  consignee  refuses  to  honor  it  rests  on  the  shoulders  of 
the  maker.  Sometimes  the  bank  requires  that  this  under- 
standing be  put  down  in  writing  but  in  recent  years  in  view  of 
the  tremendous  voltime  of  business  that  is  transacted  daily 
by  the  banks  it  is  a  sort  of  unwritten  law  that  the  drawer 
shall  be  held  responsible  for  the  failure  of  the  bank's  cor- 
respondents in  foreign  countries  to  make  their  coliections. 

Bank  Must  Have 
Title  to  Goods 

Not  only  does  the  bank  require  that  the  signature  on  the 
draft  be  entirely  satisfactory  or  that  the  character  of  the 
merchandise  be  acceptable  but  title  to  the  goods  must  be  prac- 
tically turned  over  to  it  before  a  draft  may  be  bought  Title 
to  merchandise  is  transferred  by  the  delivering  to  the  bank 
el  the  following  documents: 

(a)  Draft  in  duplicate  to  be  drawn  to  "ourselves,"  endorsed 
in  blank  or  with  the  banker  in  blank. 

(b)  A  full  set  of  all  n^;otiable  cofMes  of  the  bin  of  lading 
signed  by  the  representative  of  the  shipowner  drawn  to 
••order"  and  endorsed  in  blank. 

(c)  At  least  two  copies  of  the  invoice  and  an  itemized  state- 
ment of  charges  which  make  up  the  toUl  amount  for  which 
the  draft  is  drawn. 

(d)  Certificate  of  marine  insurance  in  duplicate. 

(e)  G)nsular  invoices  when  countries  require  such  docu- 
ments. 

(f)  Certificate  of  Origin  if  shipment  is  to  countries  requir- 
ing such  documents. 

Having  all  these  documents  in  its  possession,  and  feeling  in 
every  possible  way  that  it  is  amply  protected  to  advance  the 
money  to  the  shipper  the  bank  now  wants  to  know  how  the 
draft  is  to  be  handled  or  taken  care  of  at  the  other  end. 

The  following  instructi<nis  or  terms  are  usual: 

(a)  Delivery  of  the  bill  of  lading  is  to  be  made  if  a  sight 
draft  is  immediately  paid.  This  procedure  is  commonly 
known  as  "cash  with  documents." 

(b)  If  the  draft  is  drawn  for  a  certain  period  after  s^ 
or  date  the  banker  may  be  instructed  to  deliver  the  biU  of 


-0 

ml 


UNITCO  STATES  CUIIfieNCV 


ninety  dayaa^#y  sight 


Oxirsolves 


January  9th ^ 


drawn  under  authorization  o 


he  Japanese  Bank  #100 


UNITED 


CURRENCT 


P^^ble  with  interest  added  at  the  rate  I  of  6^  per  annum  from  date  of 
Relzo  MatauolDa»   -j^^^  .^^.^   .  — 


aft  until  approximate  arrival 
cover  in  Hew  7ork« 

P,G> Supply  Co. , 


PRO  FORMA 

Vice  President* 


Draft  Drawn  under  Banker's  Authority  to  Negotiate.  Ishould  be  endorsed  by  Drawer. 


HOW   ORDERS  ARE   FINANCED  &95 


lading  to  the  consignee  either  against  pa3rment  immediately, 

or  acceptance  of  draft.    The  latter  procedure  is  commonly 
known  as  "documents  against  acceptance." 

In  some  parts  of  the  world  importers  may  be  found  who 
desire  to  take  up  their  drafts  before  the  date  of  mattuity.  In 
instances  like  this  bankers  may  ask  for  instructions  as  to 
rates  of  discount  or  allowance  for  interest  that  such  procedure 
may  justify.  Shippers  usually  make  certain  discounts  or  al- 
lowances with  importers  in  advance  although  in  The  Far 
East  where  this  practice  is  common  the  local  bankers  publish 
regularly,  'Vates  of  rebate"  for  such  transactions. 

IPliat  Banks  Charge 
for  Collecting  Draft 

The  bank  does  not  offer  the  service  of  making  collections 

of  drafts  for  American  shippers  for  nothing.    It  must  charge 
a  small  commission  and  include  in  the  total  bill  such  charges 
as  postage  and  revenue  stamps.    The  bank's  commission  I 
ranges  from  one-eighth  of  1  per  cent  to  2^  per  cent    Then  I 
there  is  the  interest  charge  which  runs  from  the  time  the/ 
draft  is  drawn  to  the  time  the  proceeds  are  received  by  the 
bank  in  this  country.    For  instance,  if  the  bank  buys  a  draft 
on  Valparaiso,  Chile,  at  90  days  sight,  the  interest  will  run 
for  ninety  days  plus  the  time  it  will  take  the  draft  to  reach 
Valparaiso  and  the  time  required  for  the  remittance  to  reach 
this  country.   This  interest  charge,  together  with  commission, 
and  other  minor  charges,  is  included  in  the  total  of  the  draft. 

Peculiarities  of  Drafts 

in  Certain  Foreign  Countries 

Custom  or  local  conditions  in  foreign  countries  sometimes 
determine  the  method  by  which  drafts  are  to  be  paid.  The 
Colonial  clause  known  to  all  exporters  doing  business  with 
South  African  and  Australian  importers  is  familiar  to  these 
merchants.  It  reads  like  this :  'Tayable  with  Exchange  at  the 
current  rate  in  London  for  negotiating  bills  on  the  Colonies." 
This  means  that  the  draft  must  be  paid  at  the  ruling  rate  of 
exchange  between  New  York  and  London  and  is  passed  by 
American  bankers  to  London  direct  and  not  to  Colonial  banks. 


m  EXPORTING  TO  THE  WORLD 


Drawees  must  pay  interest,  commissiou  and  other  charges 
between  London  and  Colonial  banks. 

Drafts  drawn  cm  certain  countries  of  South  America  are 
either  drawn  in  dollars,  U.  S.  currency,  reading  "payable  in 
legal  currency  at  the  bank's  drawing  rate  on  day  of  payment 
for  sight  bills  on  New  York,"  or  drawn  in  pounds  sterling 
reading,  "Payable  in  legal  currency  at  the  bank's  drawing 
rate  on  day  of  payment  for  ninety  days  sight  bills  on  London.** 

When  drafts  are  drawn  in  dollars  all  charges  such  as  in- 
terest, commissions,  etc.,  should  be  included  on  the  face  value 
of  the  draft,  although  this  should  not  be  done  until  there  is  a 
complete  understanding  with  the  customer  at  the  other  end 
that  this  procedure  will  be  followed. 

When  drafts  are  drawn  in  pounds  sterling  all  minor  charges 
such  as  interest,  commission,  etc.,  are  charged  in  on  the  rate 
of  exchange  that  bankers  in  this  country  quote.  Drawees  ar- 
range to  pay  these  bills  on  London  through  their  local  bankers. 

Sometimes,  in  drafts  to  the  Far  East  or  other  places  wher^ 
it  is  impossible  to  make  exact  calculations  clauses  like  this  are 
usually  inserted:  'Tayable  with  interest  at  6  per  cent  per 
annum  from  the  date  of  draft  to  approximate  date  of  receipt 
of  proceeds  in  United  States."  This  clause  is  not  inserted 
however,  unless  there  is  some  previous  understanding  with 
the  customer  who  often  complains  against  paying  anything 
beyond  what  is  itemized  on  the  invoice. 

How  Exports  Are 
Fnumced  to  Paraguay 

An  interesting  report  on  the  methods  of  financing  ship- 
ments to  Paraguay  recently  made  by  Consul  Henry  H.  Balch, 
of  Asuncion,  Paraguay,  reflects  the  varying  methods  that  may 
be  in  force  in  various  parts  of  the  world  in  connection  with 
financing  exports.  This  report  appeared  in  an  issue  of  '*Ex- 
port  Trade"  and  part  of  it  is  as  follows: 

'The  usual  fee  chai^d  by  Asuncion  banks  for  the  collec- 
tion of  amounts  held  by  foreign  banks  on  all  classes  of  drafts, 
whether  clean,  documentary,  or  time,  is  one-fourth  per  cent 

w^ith  a  minimum  charge  of  25  centavos,  Argentine  gold  (about 
23  cents)  for  drafts  of  small  amounts. 

**Each  draft  presented  for  collection  must  bear  a  Para- 
guayan stamp.  The  stamps  required  are  as  follows:  For  sight 


HOW  ORDERS  ARE  FINANCED 


297 


drafts  or  up  to  six  day«,  60  centavos;  for  drafts  of  nine  days 
up  to  six  months,  one  peso  per  $1,000  or  more;  for  drafts  of 
more  than  six  months,  2  pesos  per  $1,000  or  more.  Such  ex- 
penses are  usually  charged  against  the  drawer  of  the  draft. 
Checks  or  drafts  remitted  by  Paraguayan  banks  in  settlement 
of  collections  for  foreign  banks  do  not  require  Paraguayan 
stamps. 

**The  commercial  code  of  Paraguay  is  the  same  as  that  of 
Argentina.  Items  must  be  presented  before  11  o'clock  a.  m. 
on  the  day  following  due  date.  A  notary  draws  up  the  act 
and  notifies  the  drawee  who  states  his  reasons  for  not  pay- 
ing. The  note  of  protest  is  made  by  the  notary  on  the  back 
of  the  draft,  a  copy  of  which  may  be  obtained  when  re- 
quired. 

"The  regular  protest  charge  is  30  Paraguayan  pesos  for 
each  signature  to  draft.  If  the  draft  is  not  in  Spanish,  an  ad- 
ditional translation  charge  of  60  Paraguayan  pesos  for  each 
page  is  made.  These  charges  are  made  whether  the  bill  is 
taken  up  or  not 

"Banks  generally  will  accept  goods  on  consignment  for 
transfer  to  the  drawee  according  to  the  terms  specified  in 
the  bill,  but  only  when  the  goods  represent  the  value  of 
the  bills  sent  for  collection.  Banks  do  not  accept  goods  for 
the  sole  purpose  of  selling  or  storing  them.  The  only  charges 
for  such  services  are  those  specified  above. 

"The  usual  banking  phrase  used  in  drafts  drawn  against 
Paraguayan  consignee  in  dollars  to  enable  the  remittance 
of  the  face  amount  of  such  bills  without  deduction  is:  Tay- 
able  with  exchange,  commission,  stamps,  and  aU  costs  for 
sight  drafts  in  dollars  on  New  YorkV 

The  charge  for  coUectingr  clean  items  on  Genoa  is  0.50  lira  oer  item  t.1„c  i 
TfcL  i}^-  ^^^'^^     To  this  is  added  any  actual  e?nLres^ncu?re.L 

Tlw  commitwon  for. collecting  any  documentary  items  is  the  same  If  for  cl^ 
plus  an  additional  1-2  per  mille.  the  minimum  charge  bein|  2  li^  ^'i^ 
commission  for  obtaining  acceptance  is  the  tune  as  for  coUectii^  ThS 
■pplies  to  the  principal  cities  of  Italy.  couecting.    This  tariff 

m^^^JSaS  JS*^^  *'^U^J^  Italy  are  1  per  mille.    If  the  bills  are  stamped  in  the 
COtmtnr  of  ongin,  the  charge  is  1-2  per  mille.    It  is  customary  to  attempt  to  Collect 
£S  m.'^JfT'  ^'•^'".^^  drawee,  who  usually  pays.     Deductions  for  sTamp  charg^^ 
•re  made  from  remittances  in  case  the  drawee  does  not  pay.    No  chjmnf  i« 
far  stamps  on  checks  remitted  in  payment  of  collections.  " 
nf  S?^^*  maturity  must  be  made  48  hours  after  the  dav 

silf/T"  f         *t  ^"V^  ^ay«  after  the  due  date  in  which  to  vll 

protested  at  any  time.    Protest  charges  amotlSt  tS  abiSt^l? 

to  f«fMim  to  rollacliuii  tad  hatOaag  chuici  ob  bilit  dim  is  nolxed  custom 


EXPORTING  TO  THE  WORLD 


th«  ^Tk*^^'  banks  guarantee  the  payment  of  drafu  accepted  by  approved  Cms  and 

the  charge  for  this  is  generally  about  one-fourth  of  1  p^cent.  ^ThT^hrasfs  Jsed 
in  dralts  to  obtain  reimburaaMat  of  aaeeial  ehar«re«  .miJiTo-  V.^  u  ,7  P""^**^*  "S*^'* 
interest.  anH  Kill— *.«^«  ^uT^-T^  apwaai  cnargcs,  sucn  as  collection,  comimssiou, 
yA^S^%^AZ£^^K^f^''\^'^?  fi"^  same  as  those  used  la  the  United  States^ 
aU^,       in=^TH  ^^'^^  d^^"  remitted  such  phrases  should 

StI2?^^V,  f^'^'hf  ""^i^'^^ake  to  remit  the  proceeds  of  bills  on  the  UniS 

bUtes  without  loss  of  exchange  provided  the  foUowing  clauae  is  placed  in  the  dSSSs 

'^'^Ib^e^'i.'^no^J^SlSS"  '^J  sight  dSSrt?  irNew^^Yo'k.^' 

eli.^  h£  iLft^  regarding  the  bank  from  which  the  drawee  pur- 

f  .      m'**  amounts  he  usually  inquires  of  several  ban^s  to  see 
J255B75lrI!.ol   .  "'^y         obtained.     When   drafts  are  Srawn  S 

EST  ^'i'^  ^'^"^^  accept  the  bank's  aellinff  rate  for 

S;f!i         •  a  war  decree  still  in  force,  the  drawermay  pay  at  iSe 

5^  LtwLf^  Sr*!SL?L**  "i**  ^""^^       I^aly,  which  rate  IS  usually  half- 

S5ik«L  «Bd  telling  rate.     This  privilege,   however,   is  rarely 

bofo?e**^tuHJ^  interest  allowed  to  accepters  for  retiring  drafU 

a2?e  as  fhe  rreH?f  t  ""i*'    J"  P^ctice,  however,  the  rate  U  genenUy  tlM 

fto  I  per  cent  accouata,  wlddt  ia  at  pTMeat  fiM 

Wii  ^l*"^  charges  other  than  those  already  mentioned  are  for  postage  and 

S.iLSF^"  ^^^^^^ 

Slr^C^i^^^  I^JlTb^^ficsl^o^J  n^o  ?I 

„    '^f  tax  provided  by  law  for  drafts  is  4  cenU  per  $100  bat  this  is 

prenerally  disregarded     In  the  rare  insUnces  in  which  ■tampt  are  ulSd  the  dnwM 

iLTo'^rv  it^  f?^.*iSA2W^fil  ri?*^  ^  object—as  hJlSerYlly"dres-fhc*  taS 

Pro?^  ch-iL"?  «?«t  P«P«-  bears  no  stamps. 

.     J^'o'*^  charges  •!«  approximately  $3  for  each  protest— a  charge  winch  tha 
drawee  has  to  assume  if  he  later  pays  the  draft.    Protests  are  very  seldom  nuSf 
and  local  banks  in  taking  items  for  acceptance  and  collectioa%«Sie*X  rfA?  to 
protest  or  not  as  they  see  fit,  without  responsibility  on  their  oartTt^  I 
protested  either  for  failure  to  accept  or  to  pai?  md  the^StH;  k  ^ 

WMmty  m  case  of  failure  or  bankruptcy.  All  protests  must  be  made  hefnrl  - 
goto  public  and  two  witnesses.  The  holder  of  a  protcSed  item^s  enrit  ?H  #2 
i3P893!)"'"'  P'^'^"'  .  ^Colombia  ciniiSiw  cSSJl  Jf£ 

mi  *lISi*'^*»h«„„K°^A,  generally  object  to  paying  collection  charges  on  items  drawn 
T?«?^'*  naturaUy  pay  interest  on  time  drafts  when  so  sDccifi^T 

ii^*?lS{^e5*A*^'^*L*V*^"\*^^  „p^„3^  colle'tion  and  it  U  sui 
mt^  that  w*cn  it  is  desired  that  the  importer  pay  these  ckarire.  *W-  tZ 
inerted  on  the  face  of  the  draft  the  phrase,  "with  all  bi<fii  chiS« *  *  ^ 

^^^Local  banks  do  not  guarantee  the  payment  ot  dl^teiScoaptod  by  HHmmd 

If  the  shij>pin|r  papers  contalo  the  drawee's  name  as  consiirnee  thore 
SiSSlK  ^^vrf  *™        CoIomWa  with  document  atUched  to  be  de^ 

i^^^t^  ^''i  KT'^V  merchandise  arrives  at  the  port  it  is  delivered  to  the 

fK?^JS!L"  ^-^T  transportation  company,  and  bUls  of  lading  are  not  JiSuired  by 
the  customs  oflficials  as  a  condition  of  delivery  to  OOBSignee  The  onlv^o^»mer.^ 
required  to  obtain  the  shipment  is  the  Colombia  invoice    and  t?;  o«n 

hS'mi'v'H  ^  *"TO«ce  attachSl  tTSfdrafrheld  by  the  baSk 

tfi<Sl2^bfcS*;li,l*'*S;jK  •  ^  '"T""  <Hrect  by  the  cn  .^..Vhou^  frSm 

orS^T^  ?^  consul,  wbich  IS  issued  to  him  on  the  payment  of  a  smaU  stamo  fS 
and  which  he  can  use  for  making  the  regular  customs  entry.    This  ttSwdureif  «2 

Tif  b^rtWS^^oX^tr^^er^han«"u^^  AlJ-SSo^^ 


CHAPTER  XIX 


AlfBRICAN  BANKS  IN  FOREIGN  TRADE  AND 

FOREIGN  INVESTMENTS 

An  exporting  nation  that  aims  to  obtain  a  reasonable  share 
of  the  world's  commerce  reqioires  coordinatkm  on  the  part 
o£  thoee  interests  that  may  be  dire^^y  or  indireetiy  con- 
nected with  foreign  trade.  Obviously,  there  must  be  a  desire 
on  the  part  of  all  concerned  to  work  in  harmony  for  the 
development  of  business  abroad;  there  must  be  tlie  fullest 
cooperation  on  all  sides;  there  must  be  a  natural  willing- 
ness to  shouldeir  a  certain  share  of  the  common  task.  Work- 
ing hand  in  hand.,  the  building  of  business  overseas  will  be 
accomplished  with  facility ;  working  at  cross  purposes,  prog- 
ress will  be  retarded. 

It  is  needless  to  say  that  from  the  Goyemment  must  come 
the  cooperation,  and  the  authority  to  do  business  abroad 
on  a  basis  that  will  put  us  on  an  equality  with  our  foreign 
competitors.  We  have  already  seen  how  American  manu- 
facturers and  exporters  may  combine  for  the  purposes  of 
engaging  in  foreign  trade  on  a  basis  that  will  insure  economy 
of  operation  as  well  as  efficiency  in  merchandising.  Before 
the  enactment  of  the  Webb-Pomerene  Act  there  was  no 
device  available  to  American  exporters  that  would  enable 
them  to  successfully  compete  with  gigantic  combinations  ex- 
isting in  fore^  countries.  While  we  were  enjoying  a  tfe- 
mendous  business  abroad  in  spite  of  this  disadvantage,  never- 
theless, the  addition  of  this  device  to  our  scheme  of  foreign 
merchandising  has  resulted  in  the  most  gratifying  results 
within  recent  months.  Our  statistics  of  foreign  Mde  ^low  this 
to  be  true. 

A  similar  situation  has  been  created  in  connection  with 
our  merchant  marine.  Whether  an  American  merchant  ma- 
rine must  exist  under  direct  Government  ownership  or  under 
private  ownership  need  not  be  argued  here.  What  we 
are  most  y/MOj  concerned  in  at  the  pctsent  moment  is  in 


299 


too  EXPORTING  TO  THE  WORLD 


having  a  merchant  marine  which  is  capable  of  carrying  our 
vast  stores  of  supplies  to  foreign  ooantries,  and  whidi  is 
capable  of  bearing  up  nnder  the  most  severe  strain.  Onr 
merchants  must  have  some  form  of  assurance  that  they  are  to 
be  extended  all  the  necessary  facilities  to  move  their  goods 
to  fmign  coontries.  Without  cooperatloii  in  this  respect  il 
WDold  be  difficnlt  to  compete  with  fofeign  countries  for  the 
world's  trafde. 

And  then  the  machmery  of  financing  our  shipments  to  cus- 
tomers abroad  nnist  be  hi  smooth  running  order.  Before  Hbe 
enactment  of  the  Federal  Reserve  Act  our  national  banks 
were  denied  the  authority  to  establish  branches  in  foreign 
countries.  The  business  of  these  banks  that  found  it  necessary  to 
do  business  abroad  was  transacted  throqs^  affiUatkas  in  foieign 
fields.  But  as  our  business  grew  it  became  apparent  that 
additional  banking  facilities  would  be  necessary  to  take  care 
of  the  increasing  wants  of  our  manufacturers  and  exporters 
whose  business  was  growing  tremendously  in  volume.  The 
banks  were  needed  |o  handle  credit  operations;  to  obtain 
credit  information,  and  to  transact  all  other  business  peculiar 
to  banks  engaged  in  foreign  trade. 
The  Federal  Reserve  Act  came  to  the  rescue.   It  empow- 


nee  paper  repre- 


ered  our  national  banks  to  discount  ac 


sodations  organized  for  foreign  trade  under  agreement  with 
the  Federal  Reserve  Board,  and  to  establish  branches  in 
foreign  countries. 

With  the  loosening  of  the  1^  strings,  American  t^niAiy 
corporations  have  been  making  remarkable  progress  hi  for- 
eign fiekls.  The  American  exporter  now  has  banking 
facilities  equal  to  those  of  any  other  foreign  country.  Inter- 
national transactions  are  now  handled  by  our  banks  with  ease. 
It  is  just  as  easy  to  transact  business  through  a  bank  with  a 
merchant  m  Buenos  Aves  as  it  is  with  a  mefchant  in  North 
Dakota.  These  banks  are  also  rendering  remarkable  service. 
Tliey  are  gathering  reliable  credit  data  from  all  corners  of  the 
globe  for  the  use  of  their  clients.  Information  regarding  com- 
mercial conditions  is  at  the  disposal  of  manufocturers  and 
exporters.  For  instance,  the  Natk)nal  Qty  Bank  of  New 
York,  which  has  the  largest  number  of  branches  in  foreiim 


AMERICAN  BANKS  IN  FOREIGN  TRADE  301 


countries  of  any  American  bank  issues  booklets  on  foreign 
trade  that  are  invaluable  to  American  merchants. 

F<M:eign  trade  experto  connected  with  the  bank  from  time 
to  time  prepare  papers  on  various  phases  of  foreign  trade  that 
should  be  in  the  hands  of  every  exporter. 

Another  national  bank  rendering  admirable  service  in  for- 
eign trade  is  the  Irving  National  Bank  of  New  York  City. 
Although  it  has  no  branches  in  foreign  countries  it  has  affilia- 
tkms  in  all  principal  centers.  A  feature  of  the  bank's  services 
to  exporters  is  the  information  it  gratuitously  extends  to  ex- 
porters. It  has  published  two  books  on  foreign  trade — one 
concerning  Latin  America  and  another  the  Far  East  that 
should  be  in  the  library  of  every  exporter. 

TTie  Guaranty  Trust  Company,  of  New  York,  a  state  insti- 
tution, is  another  bank  that  is  rendering  great  service  to  ex- 
porters J  The  Guaranty  Trust  Company's  publications  in  con- 
nection with  foreign  trade  are  noteworthy.  Having  its  own 
branches,  and  correspondents  in  many  parts  of  the  world  the 
Guaranty  Trust  Company  is  in  a  position  to  render  efficient 
service  to  its  clients. 

Foreign  Branches 

of  American  Banks 

There  is  given  below  a  list  of  foreign  branches  of  national 

banks,  and  banks  doing  business  under  as^reement  with  the 
Federal  Reserve  Board,  which  were  open  for  business  on 
November  10, 191d: 

National  Banks. 

1.  National  City  Bank  of  New  York  Cityi 

Buenos  Aires,  Argentina.  Artemisa,  Cuba. 

Once,  Buenos,  Aires,  Bayamo,  Cuba. 

Argentina.  Caibarien,  Cuba. 

Rosario,  Argentina.  Camaguey,  Cuba. 

Bahia,  Brazil.  Cardenas,  Cuba. 

Pernambuco,  Brazil.  Ciego  de  Avila,  Cuba. 

Porto  Alegre,  Brazil.  Cienfuegos,  Cuba. 

Rio  de  Janeiro,  Brazil.  Colon,  Cuba. 

Santos,  Brazil.  Cmces,  Cuba. 

Sao  Paulo,  Brazil  ,  Cuatro  Caminos,  Habana, 
Santiago,  Chile.  Cuba. 


EXPORTING  TO  THE  WORLD 


Valparaiso,  Chile. 
Guantanamo,  Cuba. 
Habana,  Cuba. 
ManzanillOy  Cuba. 
Matanzas,  Cuba. 
Pinar  del  Rio,  Cuba. 
Placetas  del  Norte,  Cuba 
Remedios,  Cuba. 
Sagua  la  Grande,  Cuba. 
Sancti  Spiritus  ,Cuba. 
Santa  Clara,  Cuba. 
Santiago,  Cuba. 
Union  de  Reyes,  Cuba. 
Yagnaijay,  Cuba. 
Genoa,  Italy. 

2.  First  National  Bank  of  Boskm, 
Buenos  Aires,  Argentina 

Banks  Doing  Business  Under  Agbexmsiit  with  tbi 

Fbdbral  RiaES¥B  Board. 

1,   American  Foreign  Banking  Corporation,  New  York  City: 


Galiano,  Habana,  Cuba. 

Barcelona,  Spain. 

San  Juan,  Porto  Rico. 

Vladivostok,  Siberia. 

Port  of  Spain,  Trinidad. 

Calle  Rondeau,  Monte- 
video, Uruguay. 

Montevideo,  Uruguay. 

Caracas,  Venezuela. 

Maracaibo,  Venezuela. 

Medellin,  Colombia. 

Temporarily  closed — 
Moscow,  Russia. 
Petrograd,  Russia. 


Matt, 


« . 


Panama  City,  Republic 
of  Panama. 

Port  au  Prince,  Haiti. 
Rio  de  Janeiro,  Brazil. 


Brussels,  Belgium. 
CaUy  Gambia. 
Cristobal,  Canal  Zone. 

Harbin,  Manchuria. 
Habana,  Cuba. 
Manila,  Philippine 
Islands. 

2.   Mercantile  Bank  of  the  Americas^  NiW  York  City: 

Paris,  France. 

Barcelona,  Spain. 

Madrid,  Spain. 

Afl&liated  Institutions — 
Banco  Mercantil  Americano  de  Colombia;  Bogata, 
Barranquilla,  Carti^itena,  Medellin,  Cali,  Girardot,  Man' 
izales,  Honda,  Armenia,  Bucaramanga,  Colombia. 

Banco  Mercantil  Americano  del  Peru:  Lima,  Arequipa, 
Chiclayo,  Callao,  Trujillo,  Peru. 

Banco  Mercantil  Americano  de  Caracas:  Caracas,  La 
Guayra,  Veneiuela. 


AMERICAN  BANKS  IN  FOREIGN  TRADE  303 


American  Mercantile  Bank  of  Brazil:  Para,  Pemambuco, 
Brazil. 

National  Bank  of  Nicaragua:  Managua,  Blueiields,  Leon, 

Granada,  Nicaragua. 
Banco  Mercantil  Americano  de  Cuba:  Habana,  Cuba. 
Banco  Atlantida :  La  Ceiba,  Tegucigalpa,  San  Pedro  Sula, 

Puerto  Cortez,  Tela,  Amapala,  Honduras. 

(A  branch  office  is  also  maintained  by  the  Mercantile 
Bank  of  the  Americas  in  New  Orleans,  La.) 

8.  Ana  Banking  Corporation  of  New  York  City: 

Canton,  China.  Manila,  P.  I. 

Changsha,  Chuia.  Peking,  China. 

Hankow,  China.  Shanghai,  China. 

Hongkong,  China.  Tientsin,  China. 

4.  International  Banking  Corporation  of  New  York  City: 

Bombay,  India.  Panama,  Republic  of  Pan- 
Canton,  China.  ama. 
Calcutta,  India.  Rangoon,  India. 
Batavia,  Java.  Shanghai,  China. 
Cebu,  P.  I.  Soerabaya,  Java. 
Colon,  Republic  of  Singapore,  Straits  Settle- 
Panama. 

Hankow,  China.  Domingo,  Domini- 

„  , .    ^, .  can  Republic 

Harom.  China.  ^ 

-            .  Sanchez,  Domuucan  Re- 

Hongkong,  Chma.  ^^^^.^ 

Kobe,  Japan.  ^  p^^^^  Uacotic. 
London,  England.  Dominican  Republic. 

Lyons,  France.  Santiago,  Dominican  Re- 
Manila,  P.  I.  public. 

Peking,  China.  Tientsin,  China. 
Puerto  Plata,  Dominioui      Tsingtao,  China. 

Republic.  Yokohama,  Japan. 

(A  branch  office  is  also  maintained  by  tlie  Intematicmal 

Banking  Corporation  in  San  Francisco,  Calif.) 


30i  EXPORTING  TO  THE  WORLD 


«.  Fmrk  Union  Foreign  Banking  CarforaHem,  New  York  City  : 

Paris,  France.  Shanghai,  China, 

Yokohama,  Japan* 

(Branch  offices  are  also  maintained  in  San  Francisco, 
Califs  and  Seattle,  Wash,,  by  the  Park  Unkm  Banking 
Cofpomtiofi,) 

The  First  Naticmal  G>rporation,  Boston,  Mass,,  has  opened 
no  foreign  branches.  A  branch  office  of  the  corporation  is 
maintained  at  14  Wall  Street,  New  York  City. 

The  Shawmut  Corporation  of  Boston,  Mass.,  the  French 
American  Banking  Corporation  of  New  York  City,  and  the 
Foreign  Credit  Coiporatioa  ci  New  York  Ci^  have  opened 
no  IcMreign  branches. 

There  Is  Limit  to 

Bank's  Cooperation 

With  these  banking  institutions  ready  to  cooperate  with 
American  exporters  in  the  develofmient  of  foreign  tiade  the 
of^rtnnity  is  present  for  tremendous  progress  in  foreign 
fields.  The  difficnlties  of  financing  fordgn  shipments — which 
have  discouraged  many  an  American  exporter  from  engaging 
in  foreign  commerce— have  been  reduced  to  a  minimum  by 
the  establishment  of  branches  and  other  affiliations.  The 
ei^orter  mnst  not,  however,  place  his  entire  faith  in  the  aid 
he  is  to  receive  from  the  banks.  The  banks  can  merely  co- 
operate, but  it  is  not  their  mission  to  "drum"  up  trade  for 
their  cHents.  The  success  of  the  exporter's  venture  depends 
upon  himself  and  not  upcm  the  banker.  The  banker  has 
difficulties  of  his  own  in  maintaining  a  foreign  Ofganiza** 
tion. 

In  speaking  about  the  mission  of  American  banks  having 
branches  abroad,  John  E.  Gardine,  Chairman  of  the  Board  of 
the  International  Banking  Corporation,  before  the  Sixth  Na- 
tional Foreign  Trade  Convention  m  Chicago,  in  1919  had  this 
to  say: 

*'We  cannot  expect  to  sell  goods  without  placing  the  pur- 
chaser in  a  position  to  buy  them.  Today  the  purchasers  of 
Europe  have  no  money.  Consequentiy  whatever  we  sell  must 
be  on  a  credit  basis.  South  America,  however,  is  in  a  better 


AMERICAN  BANKS  IN  FOREIGN  TRADE  305 


position  to  trade.  In  fact,  we  have  been  a  debtor  nation  to 
that  country,  so  we  know  how  it  feels  to  owe  money,  where 
the  reverse  should  be  the  case.  That,  however,  is  the  matter 
of  yesterday.  We  are  not  here  to  criticise  what  has  been  done, 
nor  to  suggest  what  should  be  done  tomorrow  along  political 
lines.  My  purpose  is  to  demonstrate  to  you  the  usefulness 
of  one  branch  of  commercial  life  of  this  country,  in  doing 
pioneer  work  in  foreign  lands,  and  that  is  to  show  you  to 
what  extent  the  branch  bank  system,  as  authorized  by  the 
Federal  Reserve  law,  can  be  utilized  to  its  fullest  extent  imd 
can  lend  its  aid  to  the  furtherance  of  the  foreign  business  of 
the  country,  which  will  be  so  essential  in  the  future. 

Federal  Reserve  Law 
FermUs  Foreign  Branches 

"As  you  all  know,  this  notable  act  of  ours  permits  national 
banks  with  a  capital  in  excess  of  one  millioa  dollars,  to  es- 
tablish iMranch  banks  in  foreign  countries,  with  the  consent 
of  the  Federal  Reserve  Board.  That  consent  has  never  been 
withheld,  but  the  establishment  of  branch  banks  is  not  an 
easy  matter.  It  is  not  a  question  of  money.  It  is  a  question 
absolutely  of  personnel. 

"It  may  seem  strange  that  in  this  country  of  107,000,000 
inhabitants,  one  of  the  most  difficult  things  to  obtain  is  a 
staff  of  competent  men  to  engage  in  one  of  the  most  respect- 
able, most  lucrative  businesses  in  foreign  lands.  But,  sad  to 
relate,  it  is  so,  and  the  result  has  been  that  the  banks  of  this 
country  are  fcmed  to  establish  their  own  educational  insti- 
tutions, so  that  these  men  can  have  the  proper  training. 

**In  the  past  we  have  been  obliged  to  put  our  reliance  upon 
foreign  institutions,  in  doing  our  foreign  business.  That 
again,  is  a  matter  of  yesterday.  The  foreign  institutions  that 
are  abroad  resent  the  entrance  of  American  institutions 
into  their  field,  and  properly  so.  They,  of  course,  are  only 
there  in  the  interest  of  their  nations,  and  to  such  an  extent 
do  they  carry  out  that  policy  that  they  do  not  hesitate  to 
resort  to  the  most  unfair  methods  in  meeting  and  combatting 
competition  from  other  lands.  It  is  no  small  wonder  that  the 
German  trader  was  so  successful  in  foreign  lands.  But  when 
we  now  find  out  how  that  was  done,  we  really  shudder  at  the 


306  EXPORTING  TO  THE  WORLD 


lowness  of  their  attitude.  Never  an  invoice  nor  bill  of  lading 
came  into  their  hands  but  what  it  was  copied  and  sent  to  their 
liome  office  and  there  made  use  of  to  the  fullest  extent.  Is 
it  any  wonder  that  their  trade  progressed  so  well  ? 

"Another  advantage  that  the  American  merchant  can  find 
in  the  existence  of  branch  banks  is  in  the  continuation  of  re- 
sfKMisibility.  Many  of  yoa  have  noted,  when  you  have  handed 
your  collections  into  the  bank  that  you  were  told  that  the  bank 
would  assume  no  responsibility  for  any  act  of  its  agents,  over 
whom  it  had  no  control.  So  that  if  a  failure  took  place  while 
an  item  was  in  process  of  collection,  and  it  just  happened  to 
strike  you  and  your  check  that  was  remitted  was  worthless, 
you  were  the  sufferer.  Your  bank  assumed  no  responsibility. 
Now  that  has  been  done  away  with.  That  is  also  a  matter  of 
yesterday.  Today  responsibility  is  continuous.  It  is  an  item 
that  really  is  worth  consideration  when  you  take  into  account 
the  unknown  quantity  that  you  formerly  had  to  employ  in 
foreign  business. 

Credit  Information 
Available  to  Client 

**A  further  and  more  important  advantage  is  the  compila- 
tion of  credit  information.  Reports  are  on  file  in  the  office  of 
the  American  banks  that  are  absolutely  complete,  and  could 

readily  be  compared  with  the  files  of  any  credit  agency,  and 
the  contents  of  these  files  are  not  public  property,  but  the 
property  of  the  clients  of  the  bank,  and  are  absolutely  con- 
fidential, and  as  confidential  communications,  contain  matter 
that  no  credit  agency  was  ever  able  to  obtain.  These  files  are 
at  all  times  subject  to  the  inspection  of  the  bank's  clients,  and 
are  always  brought  down  to  the  latest  date. 

"Furthermore,  the  advantage  that  the  American  shipper  has 
in  the  protection  of  his  property:  You  all  know  that  %ht  laws 
of  some  of  the  countries  to  the  south  of  us  are  rather  lax  in 
the  safeguarding  of  ocmmiercial  interests,  particularly  bills 
of  lading.  The  foreign  merchant  can  oftimes  obtain  his  goods 
by  the  mere  statement  at  the  custom  house  that  they  are  his, 
although  draft  might  be  drawn  with  bill  of  lading  attached, 
subject  to  payment.  That  means  nothing,  but  here  is  where 
the  branch  bank  stqM  in  and  knows  just  exactly  how  to  pro- 


AMERICAN  BANKS  IN  FOREIGN  TRADE  807 


ceed  in  order  to  prevent  any  abuse  of  that  practice.  Since  we 
have  had  branch  banks  in  South  America  I  cannot  recall  a 
single  instance  where  merchants  have  lost  anything  through 
the  delivery  of  goods  without  proper  authority. 

"In  the  foraging  remarks  you  will  find  the  following  ele- 
mentary service  referred  to  along  general  lines,  which  we  will 
summarize  as  follows:  Continuity  of  responsibility,  inviolabil- 
ity of  trade  secrets,  the  care  of  merchandise,  reliable  credit 
information.  These  are  primary  elements  in  the  conduct  of 
all  banking  business  and  we  will  now  enter  upon  a  closer  in- 
vestigation of  matters  pertaining  to  individual  clients ;  par- 
ticularly in  matters  of  public  utilities  or  ^e  laying  of  water 
pipes  or  other  city  or  government  undertakings,  but  in  those 
cases,  for  instance  thf  laying  of  water  pipes  or  mains  in  the 
city  of  Rio  de  Janiero :  I  know  a  great  deal  of  care  has  to  be 
exercised  to  see  that  the  contractors  are  not  imposed  upon. 
The  contractors,  being  Americans,  the  cases  are  generally  re- 
versed. Instead  of  the  contractor  imposing  upon  the  city,  the 
authorities  try  to  impose  upon  the  contractor  and  he,  not  being 
familiar  with  conditions,  not  knowing  how  to  turn  or  twist, 
appeals  to  the  branch  banks,  but  the  men  who  are  thoroughly 
conversant  with  that  kind  of  business  are  in  touch  with  good 
lawyers,  and  iu  that  way  a  great  service  is  being  rendered. 

How  Bank  Advances 

Money  Against  iShipments 

good  deal  of  doubt  has  been  brought  forward  as  to 
whether  American  banks  are  in  a  position  to  advance  money 
against  shipments  of  merchandise,  as  is  being  done  with  cer- 
tain staples  shipped,  such  as  cotton,  and  on  this  subject  the 
mind  of  the  manufacturer  can  be  set  at  rest.  This  line  of 
business  is  carried  on  in  different  w^ays,  either  through  a  direct 
purchase  of  the  draft  or  through  an  advance  of  a  certain  per- 
centage of  the  face  value  of  the  draft,  or  through  direct  loans 
with  drafts  hypothecated  as  collateral,  or  through  direct  loans 
regardless  of  any  collateral  \alue,  and  this  latter  line  is  em- 
ployed mainly  where  large  contracts  are  in  question  and 
where  it  is  not  practicable  or  feasible  to  segregate  any  f»r- 
ticular  transactioo.  These  matters  can  be  arranged  under  an 


308  EXPORTING  TO  THE  WORLD 


understandiog  with  the  honie  bank,  and  in  tbe  ftiak  hm 
worked  ottt  very  satisfactorilj. 

**So  far  we  have  spoken  of  the  manufacturer  only  as  grant- 
ing credits,  that  is,  he  draws  his  draft  and  assumes  the  entire 
responsibility  for  the  transaction  until  he  receives  his  money 
in  either  one  of  the  forms  indicated  above.  This  Sjrstem  may 
not  suit  the  manufacturer,  and  he  ak>ne,  is  the  arbiter  in  that 
respect*  He  might  say,  1  haven't  the  capital  to  do  business 
that  way,"  or  the  goods  being  of  such  a  character  that  they 
arc  valueless  in  the  hands  of  any  general  purchaser,  he  mi^t 
call  for  payments  before  the  goods  are  shipped.  Here  agam  the 
branch  bank  steps  in  and  is  of  the  greatest  assistance.  Being 
acquainted  with  local  conditions  and  with  the  merchants,  the 
prospective  buyer  readily  enters  into  an  arrangement  with 
the  branch  bank  to  make  payments  through  the  home  office 
under  certain  conditicms,  either  against  the  delivery  of  docu- 
ments or  otherwise,  so  tiiat  the  American  manufacturer  re- 
ceives his  money  somethnes  even  before  the  order  is  executed, 
where  the  problem  is  a  risky  one,  but  more  often  before  the 
goods  leave  the  factory. 

Bank  Brmuh  Do€s 
Tmimidmu  Bumi€u 

"Business  conducted  along  these  lines  in  the  past  year 
or  so,  in  the  case  of  one  particukr  bank  I  have  in  mind  at 
the  present  time  has  run  into  the  hundreds  of  millions  of 
dollars,  and  the  service  rendered  in  this  way  extends  all  over 
the  world,  east,  west,  north  and  south — in  fact,  branches  of 
that  particular  bank  girdle  the  earth.  The  same  service  can 
be  rendered  the  importer  as  well  as  the  exporter.   The  de- 
velopment of  the  foreign  busmess  of  the  country  is,  generally 
speaking,    greater  importance  than  is  manifested  by  a  casual 
consideration.    Gmimercial  instruments  arising  out  of  the 
import  and  export  business  of  the  country  are  the  very  es- 
sence of  the  security  underlying  the  note  issue  of  the  Federal 
Reserve  Banks,  I  refer  to  the  bankers'  MHlMice.  That,  as 
a  rulei  results  from  fmign  busmess.  Internal  trade  brings 
with  it  trade  acceptances  which  are  just  as  important,  but  car- 
ries with  it  only  the  security  of  a  commercial  house;  whereas 
the  banker's  acceptance  is  recognized  the  world  over  and  is 
eagerly  sought  for  as  an  investment  at  llie  closest  fates 
eveiywhere» 


AMERICAN  BANKS  IN  FOREIGN  TRADE  80» 


*'Now  for  the  present  the  bankers  of  this  country  are  per- 
fectly willing  to  render  all  assistance  alo^  these  lines  that  it 
is  possible  to  give,  but  it  must  be  borne  in  mind  that  there  are 
limitations  in  this  respect.  These  limitations  are  provided  for 
by  law,  beyond  which  a  bank  is  not  able  to  go.  Thus  you 
will  see  that  the  foreign  business  of  the  country  would  be 
severely  drcumscribed  if  confined  merely  to  this  extent* 
Therefore,  the  cooperation  of  manufacturers  must  be  expected. 
The  business  of  the  country  would  then  assume  proportions 
commensurate  with  the  resources,  industrial  and  otherwise* 
of  our  people,  but  this  all  requires  education,  and  I  have  en- 
deavored in  my  remarks  to  point  out  to  what  extent  the 
banks  and  bankers  of  the  country  will  be  helpful  to  you  in 
creating  the  necessary  experience  to  simessf  uUy  conquer  the 
situatkm* 

The  Foreign  Trade 
Department  of  a  Bank 

**hk  order  to  bring  the  buyer  and  seller  togetiier,  a  new  de- 
partment has  been  organized  by  the  banks  of  this  country, 

and  this  is  known  as  the  Foreign  Trade  Department.  This  is 
an  institution  entirely  distinct  from  the  usual  banking  activi- 
ties and  is  manned  in  its  personnel  by  men  familiar  with  every 
line  of  business,  whether  commercial  or  industrial,  and  stands 
ready  at  all  time,  in  every  way,  to  lend  a  helping  hand  to  the 
different  manufacturers  who  first  venture  into  the  foreign 
field.  Service  is  the  watchword.  As  all  these  questions  arise 
as  to  methods  of  manufacturing,  marketing,  financing  and 
other  kindred  points  that  seem  to  the  uninitiated  difficult  of 
solution  or  insurmounUble,  thw  is  where  the  agencies  of 
the  foreign  trade  departments  of  the  various  banking  in- 
stitutions throughout  the  country  successfully  contend  with 
any  difficulties  of  that  character.    It  must  be  further  borne 
in  mind  that  the  personal  characteristics  of  the  foreign  na- 
tions are  not  those  of  our  own  and  that  methods  that  are 
necmary  in  apptoachmg  them  or  in  dealing  with  them  or  in 
solving  problems  that  arise  out  of  continued  intercourse,  need 
the  greatest  finesse  in  order  to  avoid  friction ;  in  fact,  friction 
is  the  word  that  ought  to  be  entirely  abolished  from  any  com- 
mercial code.  The  American  youth  sent  out  to  man  these 


310  EXPORTING  TO  THE  WORLD 


brandies  are  men  of  tried  character  throughout,  eonveiaaat 
with  business  a&irs  in  this  country  and  very  readily  adapt 

themselves  to  foreign  surroundings,  and  to  the  idiosyncrasies 
of  the  inhabitants  of  foreign  countries,  and  through  the  exer- 
cise of  a  fine  sense  of  discretion  are  able  to  smooth  over  rough 
spots  that  migfat  otfaenroe  cause  a  cessation  of  all  inter- 
course." 

Other  Services 
Rgndered  by  Branchis 

Service  is  the  principal  feature  of  the  American  bank  branch 
in  a  foreign  country.  Without  service  the  bank  cannot  expect 
to  thrive.  Without  cooperating  with  American  manufac- 
turers and  eacporters  it  cannot  eaq>ect  to  grow.  It  must  give 
service.  Our  larger  banking  institutions  are  so  organized  that 
they  undertake  through  their  foreign  trade  departments  to 
keep  their  clients  who  are  engaged  in  foreign  commerce  in 
dose  touch  with  conditions  in  foreign  lands.  Clients  of  such 
banks  r^^ularly  recdve  trade  reports  from  all  sections  of  the 
globe.  Credit  reports  on  customers  are  at  the  disposal  of 
clients.  These  credit  reports  are  complete  and  represent  one 
of  the  most  important  functions  a  bank  engaged  in  foreign 
trade  can  perform  for  the  American  exporter  who  would  be 
running  around  in  circles  unless  he  could  obtain  rdiable 
credit  information  concerning  a  customer  to  whom  he  desires 
to  ship  thousands  of  dollars  worth  of  merchandise. 

The  traveler  also  receives  the  full  benefit  of  this  service 
in  touring  in  foreign  countries  where  American  branch  banks 
exist  The  home  office  is  always  ready  to  give  lettera  of  in- 
troduction to  dients  who  wish  to  visit  abroad.  These  letters 
are  presented  to  the  manager  of  the  foreign  branch.  The  client 
is  made  to  feel  at  home  on  arrival  in  a  foreign  port.  If  he  is 
unacquainted  with  the  methods  of  exchanging  his  American 
dollars  for  the  currency  of  the  country  in  which  he  happens 
to  be  the  branch  manager  helps  him.  If  he  would  li9ce  to 
obtain  a  list  of  reliable  firms  for  the  purpose  of  soliciting  new 
business  the  branch  manager  sees  that  he  is  given  a  reliable 
list  of  names,  and  information  r^arding  their  credit  standing. 
If  he  is  unable  to  speak  the  language  oi  the  country  the  brandi 
manager  will  place  at  his  disposal  a  member  of  the  staff  to 


American  banks  are  extending  their  activities  to  the  world's  markets 
where  there  may  be  opportunities  for  the  sale  of  American  goods.  For- 
eian  branches  of  American  banks  are  needed  in  order  to  facilitate  the 
financing  of  shipments.  This  photograph  shows  the  London  office  of  the 
6iiaranti»  Trust  Company  of  New  York. 


INTENTIONAL  SECOND  EXPOSURE 


810  EXPORTING  TO  THE  WORLD 

branches  are  men  of  tried  character  throughout,  COnirersant 
with  business  affairs  in  this  country  and  very  readily  adapt 
themselves  to  foreign  SttrrotuidiiigSy  and  to  the  idiosyncrasies 
of  the  inhabitants  of  foreign  countries,  and  through  the  exer- 
cise of  a  fine  sense  of  discretion  are  able  to  smooth  over  rough 
spots  that  might  otherwise  cause  a  cessation  of  alJ  inter- 
course." 

Other  Services 

Rendered  by  Branches 

Service  is  the  principal  feature  of  the  American  bank  branch 
in  a  foreign  country.  Without  service  the  bank  cannot  expect 
to  thrive.  Without  cooperating  with  American  manufac- 
turers and  exporters  it  cannot  expect  to  grow.  It  must  give 
service.  Our  larger  banking  institutions  are  so  organized  that 
they  undertake  through  their  foreign  trade  departments  to 
keep  their  clients  who  are  engaged  in  foreign  commerce  in 
close  touch  with  conditions  in  foreign  lands.  Clients  of  such 
banks  regularly  receive  trade  reports  from  all  sections  of  the 
globe.  Credit  reports  on  customers  are  at  the  disposal  of 
clients.  These  credit  reports  are  complete  and  represent  one 
of  the  most  important  functions  a  bank  engaged  in  foreign 
trade  can  perform  for  the  American  exporter  who  would  be 
running  around  in  circles  unless  he  could  obtain  reliable 
credit  information  concerning  a  customer  to  whom  he  desires 
to  ship  thousands  of  dollars  worth  of  merchandise. 

The  traveler  also  receives  the  full  benefit  of  this  service 
in  touring  in  foreign  countries  where  American  branch  banks 
exist.  The  home  office  is  always  ready  to  give  letters  of  in- 
troduction to  clients  who  wish  to  visit  abroad.  These  letters 
are  presented  to  the  manager  of  the  foreign  branch.  The  client 
is  made  to  feel  at  home  on  arrival  in  a  foreign  port.  If  he  is 
unacquainted  with  the  methods  of  exchanging  his  American 
dollars  for  the  currency  of  the  country  in  which  he  happens 
to  be  the  branch  manager  helps  him.  If  he  would  like  to 
obtain  a  list  of  reliable  firms  for  the  purpose  of  soliciting  new 
business  the  branch  manager  sees  that  he  is  given  a  reliable 
list  of  names,  and  information  regarding  their  credit  standing. 
If  he  is  unable  to  speak  the  languaj^^e  of  the  country  the  branch 
manager  will  place  at  his  disposal  a  member  of  the  staff  to 


American  banks  are  extending  their  activities  to  the  world's  markets 
where  there  may  be  opportunities  for  the  sale  of  American  goods.  For- 
eign branches  of  American  banks  are  needed  in  order  to  facilitate  the 
financing  of  shipments.  This  photograph  shows  the  London  office  of  the 
Guaranty  Trust  Company  of  New  York. 


AMERICAN  BANKS  IN  FOREIGN  TRADE  311 


act  as  interpreter  and  to  introduce  him  to  prospective  cus- 
tomers. If  he  has  trouble  in  getting  his  trunks  out  of  the 
customs  house  or  in  planning  his  itineraiy  the  brancfi"  manager 
sees  that  he  is  given  assistance. 

Representative  of 
American  Business 

Above  all,  the  service  of  the  American  bank  in  the  foreign 
field  that  is  most  important  is  that  of  acting  as  the  representa- 
tive of  American  business.  In  such  capacity,  it  is  needed.  It 
cannot  get  the  business  for  American  business  men — ^it  is 
not  supposed  to  assume  that  role,  but  it  can  help  in  develop- 
ing trade.  It  can  place  the  foreign  customer  in  touch  with 
leliable  American  manufacturers  or  exporters.  Once  having 
accomplished  this  the  consummation  of  the  transaction  rests 
with  the  American  shipper.  Hundreds  of  specific  instances 
could  be  cited  where  our  American  banks  established  in 
foreign  cities  have  directly  fostered  trade.  The  establish- 
ment of  an  American  bank  in  a  foreign  country  means  that 
the  United  States  is  engaged  in  foreign  business,  and  that  it 
is  in  a  position  to  extend  every  facility  in  its  power  to  bring 
buyer  and  seller  together.   It  acts  as  go-between. 

American  business  men  do  business  differently  than  foreign 
competitors.  The  success  of  our  foreign  trade  will  rest  laige- 
ly  not  in  the  way  we  assimilate  Ifie  ideals  and  customs  of 
peoples  across  the  seas  but  upon  the  way  we  extend  the 
typical  American  commercial  methods  to  their  shores.  We 
need  not  change  our  methods ;  we  need  not  lose  our  personal- 
ity. We  must  remain  peculiarly  American.  Foreigners  (ex- 
pect this  of  tts.  It  is  a  relief  to  know  that  American  branches 
In  foreign  countries  are  American  in  every  way.  They  rep- 
resent better  than  any  foreign  bank  could  possibly  do  it  the 
American  idea  as  it  develops  in  foreign  merchandising.  Take 
the  gathering  of  foreign  credit  information,  for  instance. 
When  American  foreign  branches  were  first  established 
in  foreign  countries  it  was  said  that  importers  could  never 
be  induced  to  give  the  specific  information  that  American 
business  men  are  accustomed  to  give  in  the  United  States. 
Now  this  is  not  difficult.  The  typical  foreign  credit  report  is 
a  generalization  of  a  business  man's  standing  in  the  common- 


m  EXPORTING  TO  THE  WORLD 


ity.  Sometimes,  such  reports  are  sufficient,  but  good  business 
dictates  that  reports  of  this  character  be  more  specific  now- 
adays. Sckoie  American  banking  institations  have  <yver  50,000 
credit  reports  of  foreign  bnsiness  men  in  their  files.  It  is 
hardly  likely  that  a  manufacturer  could  go  wrong  in  shipping 
merchandise  to  any  importer  named  in  this  list  which  is  pre- 
pared by  eaqpertsy  and  is  ooosidered  absolutely  reliableii 

Him  BamkM 
ExUnd  CredU 

The  ability  of  American  banks  to  give  adequate  assistance 
to  our  manufacturers  in  f<Mreign  credit  extensions  is  told  by 
James  H.  Carter,  vice  president  of  the  National  City  Bank 
of  New  York  City  as  follows : 

•*A  few  years  ago  it  was  true  that  American  export  trade 
was  greatly  handicapped  by  the  lack  of  uniform  banking 
service.  It  is  not  true  mm,  mad  still  manufacturers  sometimes 
talk  as  if  they  thought  the  American  banks  would  not  do  a  ? 
much  for  them  as  European  banks  did  for  their  exporters. 
The  American  banks  that  have  built  up  international  ma- 
chinery are  themselves  extending  to  American  export  trade  a 
laige  volume  of  discount  in  the  aggregate  and  it  can  be  said 
no  American  manufacturer  who  established  his  responsi- 
bility should  lack  credit  in  his  foreign  business.  American 
manufacturers  must  do  foreign  business  upon  a  credit  basis, 
and  the  banks  will  surely  meet  them  will  a  full  share  of  co- 
operation. 

''FcMreign  credits  seem  to  be  frequently  misunderstood  by 
manufacturers.  We  often  hear  of  the  question  of  insuring 
foreign  bills,  or  getting  banks  to  buy  foreign  drafts  without 
recourse  to  the  exporter  in  case  of  dishonesty  being  brought 
up  when  groups  of  manufacturers  talk  together.  I  am  sure 
that  any  intelligent  manufacturer  who  goes  into  tiie  subject 
of  discount  without  recourse,  or  credit  insurance  exhaustively 
win  decide  for  himself  that  the  principle  upon  which  British 
and  American  bankers  have  agreed  is  correct:  that  both  are 
unsound,  or  uneconomic  in  the  long  run.  England  is  the 
home  of  the  highest  devek>pment  of  every  kind  of  insurance 
in  the  worid,  but  insurance  of  export  drafts  has  never  paid  in 
Eogland,  because  manufacturers  after  a  trial  of  it  have  so  in- 


AM£RICAN  BANKS  IN  FOREIGN  TRADE  818 


variably  come  to  the  conclusion  that  they  have  to  pay  more 
for  insurance  than  the  service  is  worth  that  they  do  not  sup- 
port any  volume  of  insurance  worth  considering.  The  manu- 
facturer who  desires  to  extend  good  lines  of  credit  to  foreign 
customers  may  go  today  to  American  banks  and  negotiate 
loans  sufficient  for  safe  business.  The  bank  will  advise  him 
of  the  credit  responsiblity  of  his  foreign  customer  but  it  will 
not  assume  the  risk  of  the  credit  The  bank  takes  into  oon^ 
sideration  the  fact  that  it  has  in  its  possession  the  goods  going 
forward;  it  takes  into  consideration  also  the  responsibility  of 
the  foreign  customers,  and,  on  the  average,  it  will  allow  the 
exporter  usually  a  much  laiger  line  of  discount  than  could 
be  obtained  were  the  business  domestic;  always,  of  course 
with  recourse  to  the  drawer  in  the  event  of  dishonesty.  Al- 
most invariably  it  has  been  the  supposed  limitation  upon  the 
foreign  business  done  on  credit  that  furnished  the  manufac- 
turer's motive  in  asking  for  insurance  on  discount  without  re- 
course. The  larger  volume  of  discount  credit  allowed  by  the 
bank  goes  in  the  direction  of  meeting  this  want.  It  is  pos- 
sible that  most  manufacturers  anticipate  a  larger  opportunity 
for  sales  than  actually  materializes ;  in  other  words,  the  manu- 
facturer actually  finds  that  the  British  and  American  banks 
give  him  as  large  a  v(dume  of  discount  as  he  really  needs  and 
should  consistently  use  in  comparison  to  the  capital  he  has 
in  his  business.  And  while  a  manufacturer  often  says  that  he 
would  willingly  pay  a  liberal  commission  or  premium  to  be 
relieved  of  the  contingent  liability  in  foreign  collections,  it 
has  worked  out  in  British  eiq>ort  experience,  and  will  surely 
work  out  the  same  in  our  trade,  that  after  trying  insurance 
at  the  rates  now  obtaining,  manufacturers  conclude  that  they 
are  paying  more  in  premiums  than  the  service  of  insurance 
is  worth." 

Forfign  Service  Thai 
Amerkam  Bankers  AdverHee 

Typical  of  the  services  that  American  banking  institutions 
engaged  in  foreign  trade  render  is  this  statement  appearing 
in  a  pamphlet  recently  issued  by  a  well  known  bank  in  New 
Yofk  Oty.  It  reads: 

**To  manufactturers  and  merchants  who  are  interested  in 


814  EXPORTING  TO  THE  WORLD 


modern  methods  of  financing  their  import  and  export  trade, 
we  offer  the  advantage  of  our  Foreign  Department,  and  invite 
the  opportunity  of  caring  for  their  needs  with  an  intelligent 
interest  in  the  task.    Supplementing  our  own  facilities  are 

those  of  correspondent  banking  institutions  in  all  the  leading 
trade  centers,  which  provide  direct  and  prompt  service  every- 
where. 

"Foreign  Exchange — Foreign  drafts,  money  orders,  checks, 

and  bills  of  exchange  are  bought  and  sold  at  current  rates.  We 
have  remittances  to  all  parts  of  the  civilized  world  in  dollars 
or  foreign  currencses* 

*'G)mmcrcial  credits — ^To  finance  imports  and  exports  we 
open  commercial  credits  and  make  payments  in  the  United 
States  and  abroad. 

'^Collections— We  accept  bills  for  collection  on  all  countries 
and  make  advances  while  hills  are  in  tibe  process  of  collection. 

**Direct  Connections — Our  direct  and  intimate  connections 
with  many  hundred  correspondents  in  all  parts  of  the  civihzed 
world  enable  us  to  perform  special  service,  both  for  the  in- 
dividual importer  and  exporter,  and  for  corporations  whose 
affairs  extend  over  a  wide  territory. 

"Acceptances — Dollar  Acceptances,  and  acceptances  in 
other  currencies  are  provided  to  finance  the  customers'  con- 
signments and  purchases.  Domestic  shipment  of  goods,  as 
well  as  imports  and  exports,  may  be  financed  on  liberal  terms 
by  this  bank's  acceptances. 

"Loans — ^Advances  on  security  of  warehouse  receipts  and 
bills  of  lading  are  made  at  cimvenience  of  clients.  We  dis- 
count approved  bills  of  exchange. 

"Letters  of  Credit — Our  letters  of  credit,  issued  on  banking 
correspondents  everywhere,  are  available  throughout  the 
world. 

Travellers'  Checks— Our  Travellers'  diecks  are  readily 
convertible  into  all  foreign  currencies  without  inconvenience 
or  delay,  and  form  a  safe  method  of  carrying  funds. 

"Money  Orders — For  remittances  to  places  too  small  to  be 
reached  through  banking  channels  we  offer  our  money  order 
system.  By  this  system  remittances  are  made  without  diffi- 
culty anjrwhere,  money  being  delivered  to  redpients  through 
their  local  post  offices,  without  extra  expense. 


AMERICAN  BANKS  IN  FOREIGN  TRADE  315 


"Cable  transfers  —  We  make  able  transfers  to  every 
country  of  the  world  with  which  America  is  in  communication. 

"Facilities  for  Banks — Of  special  interest  to  banks  and 
bankers  in  the  United  States  is  our  system  whereby  arrange- 
ments are  made  to  enable  them  to  issue  their  own  drafts  and 
money  orders,  on  forms  printed  in  their  own  name.  Such 
remittances  are  payable  through,  the  correspondents  of  this 
bank,  etc. 

"Foreign  Money — Various  foreign  currencies,  whether  gold, 
silver,  or  bank  notes,  are  received  for  credit  at  current  rates 
and  are  bought,  9tM  or  quoted. 

"Foreign  Securities — ^Wc  buy  and  sell  treasury  notes,  bills, 
bonds  and  other  foreign  obligations. 

"Financial  agent — We  act  as  fiscal  agent  for  foreign  govern- 
ments, cities,  banks,  etc.,  and  offer  our  services  for  collecting 
or  disbursing  purposes. 

"Credit  information — ^The  latest  and  most  complete  credit 
information  respecting  foreign  firms  and  corporations  is  con- 
tained in  our  files.  The  service  of  these  files  has  proved  of 
immeasurable  advantage  to  importers  and  exporters  and  is 
offered  for  the  best  accommodation  of  our  customers. 

"Intelligent  Service — ^Knowledge  of  foreign  trade  condi- 
tions, rates  of  exchange,  etc.,  is  of  vital  importance  to  the 
American  business  man.  We  cheerfully  furnish  this  informa- 
tion which  our  experience  and  wide  connections  enables  us  to 
obtain." 

Another  well  known  banking  institutbn  in  New  York  City 
maintains  a  Foreign  Trade  Bureau.  This  bureau  has  a  corps 

of  investigators  devoted  to  the  study  of  foreign  commercial 
conditions  and  export  trade,  and  its  services  are  at  the  dis- 
posal of  those  interested. 

The  bureau  will  investigate  any  concern  outside  of  the 
United  States  with  regard  to  its  credit  standing  and  general 
commercial  probity.  The  records  of  this  bureau  include  over 
50,000  names  of  firms  and  corporations  in  foreign  countries. 
It  also  collects  information  on  international  trade,  conditions 
and  opportunities  making  independent  researches,  using  a 
number  of  sources  and  checking  back  and  verifying  the  results 
of  its  labors.  It  strives  to  give  its  clients  the  latest  and  most 
complete  available  information. 

The  Bureau  keeps  files  of  foreign  and  domestic  busi- 


316  EXPORTING  TO  THE  WORLD 


ness  houses  classifying  them  according  to  their  intemai- 
tional  trade  interests,  and  watches  the  course  of  commeroe, 
with  particcilar  r^^ard  to  the  developing  needs  of  other  coun- 
tries, and  opportunities  for  the  promotion  of  new  lines. 

An  important  feature  of  this  bureau  consists  of  the  giving 
of  information  concerning  the  import  tari£^s  of  other  ooimtrics, 
trade  refutations  and  restrictions,  both  import  and  export  as 
well  as  information  r^farding  business  procedure  in  other 

The  Edge  Act  to 
Ex  tend  Long  CrediU 

The  iatest  form  of  banking  legislation  in  the  United  States 
is  the  Edge  Act,  an  amendment  to  the  Federal  Reserve  Act, 
which  represents  another  step  forward  in  the  development 
of  international  business  relations  and  the  restoration  of 
foreign  exchange  to  normal  omditions. 

The  principal  purpose  of  the  Edge  Act  is  to  permit  other 
naticms  to  purchase  American  goods  on  long-term  credits. 
This  may  be  done  without  tying  up  the  capital  of  American 
manufacturers,  exporters,  or  bankers  b^nd  a  reasonable 
time,  yet  it  permits  foreign  buyeii  to  postpone  payment  for 
goods  until  they  are  able  to  pay  or  until  the  foreign  exchange 
situation  is  more  satisfactory. 

To  accomplish  this  end,  the  Edge  Act  permits  tiie  organi- 
zation  of  corporations  which  wiU  be  permitted  to  extend 
long4erm  credits  on  notes  and  securities  offered  by  foreign 
btgrers. 

This  collateral  will  serve  as  a  basis  for  the  issuing  of 
debentures  by  these  corporations,  for  sale  to  the  American 
investing  public. 

As  one  writer  puts  it;  'Ue  Edge  Act  iwvidcs  a  species  of 
reserve  system  for  long  credits,  somewhat  like  the  system 
provided  by  the  Federal  Reserve  Act  for  short-term  credits. 
The  Federal  Reserve  bank  buys,  or  discounts  the  notes  that 
a  member  bank  has  received  from  merchants,  giving  currency 
to  the  member  bank  or  a  balance  subject  to  its  draft,  thus 
unfreestng  the  funds  wfiich  the  member  bank  had  put  be- 
yond Its  own  use  by  lending  to  the  merchant.  The  corpora- 
tions created  by  the  Edge  Act  wiU  take  tiie  bonds  or  kmg- 


AMERICAN  BANKS  IN  FOREIGN  TRADE  317 


term  notes  which  American  exporters  have  received  from 
foreign  corporations  and  business  men,  and  will  give  the 
exporter  cash  for  them,  unlocking  frozen  credits  for  him  as 
the  reserve  banks  do  for  their  members.  TUie  reserve  bank 
gets  the  cash  for  its  purposes  by  the  issue  of  circulating 
notes  or  the  creation  of  balances  subject  to  the  member 
bank's  draft.  The  Edge  Act  corporation  will  get  its  cash 
by  reselling  the  foreign  notes  or  bonds  to  American  invest- 
ors or  by  selling  the  corporation's  own  debentures  to  the 
public,  using  the  foreign  notes  and  bonds  as  collateral  to 
secure  such  debentures.** 

How  Corporations  May  Be 
Farmed  Under  Edge  Act 

The  following  is  a  summary  of  the  contents  of  the  Edge 
Act  showing  how  corporations  may  be  organized  under  its 
provisions,  and  how  they  can  conduct  business:  (the  full 
text  of  the  Edge  Act  is  given  eUewhere  in  this  cfai^ter) 

CoipormtioQs  may  be  formed  by  five  or  more  ^'natural 
persons.** 

Articles  of  association  must  be  filed  with  the  Federal  Re- 
serve Board. 

The  principal  powers  <rf  such  a  corporation  are  to  deal  in 
or  discount  notes,  drafts,  bills  of  exchange  and  acceptances, 
purchase  or  sell  securities  with  or  without  its  endorsement 
or  guarantee,  accept  bills  or  drafts  drawn  upon  it  under  limi- 
tations and  restrictions  imposed  by  the  Reserve  Board,  issue 
letters  of  credit,  borrow  and  lend  money  and  issue  debentures, 
bonds,  and  promissory  notes  under  limitations  prescribed  by 
the  Reserve  Board,  but  in  no  event  having  liabilities  out- 
standing at  any  one  time  exceeding  tem  times  its  capital  and 
surplus. 

While  it  may  receive  deposit  outside  the  United  States 
it  may  only  receive  such  deposits  within  the  United  States 
as  may  be  incidental  to  or  for  the  purpose  of  carrying  on 
transactions  outside  of  the  country. 

It  may  establish  agencies  in  the  United  States  or  branches 

abroad. 

It  is  forbidden  to  engage  in  any  other  business  except  such 
as  is  incidental  to  international  or  foreign  operations. 


m  EXPORTING  TO  THE  WORLD 


It  cannot  engage  in  commerce  or  in  trade  in  commodities 

except  as  especially  provided  in  the  Act,  nor  shall  it  control 
or  fix  prices  of  any  such  commodities  under  pain  of  forfeiting 
its  charter. 

The  corporation  must  have  at  least  $2,000,000  capital,  one 
quarter  of  which  must  be  paid  in  before  beginning  business. 
National  banking  associations  may  invest  in  the  stock  of  one 
or  more  corporations  oiganised  under  the  Edge  Act,  but  only 
up  to  10  per  cent  of  their  capital  and  surplus. 

A  majority  of  the  shares  of  the  capital  stock  must  be  held 
and  owned  by  citizens  of  the  United  States,  or  by  corpora- 
tions  or  firms  chartered  under  the  laws  of  the  United  States 
or  of  a  State  in  the  Union,  the  controlling  interests  in  which 
are  owned  by  citizens. 

Banks  or  banking  instttutkms  now  incorporated  under 
state  laws  may,  by  vote  of  shareholders,  and  with  the  ap- 
proval of  the  Reserve  Board,  be  converted  into  a  Federal 
corporation  of  the  kind  authorized  by  the  Edge  Act. 

The  success  of  the  Edge  Act  will  depend  largely  upon 
the  extent  the  corporatioiis  organized  under  the  act  are  able 
to  convince  the  American  investing  public  as  to  the  desira* 
bility  of  the  debentures  oflFercd  for  sale.  A  campaign  of 
education;  it  seems,  will  be  required  to  bring  about  the  de- 
sired results.  It  does  not  take  much  effort  to  induce  an 
American  investor  to  place  his  money  on  a  domestic  security, 
for  besides  its  attractiveness,  he  feds  a  sense  of  security  be- 
cause it  is  purely  an  American  enterprise.  But  when  he  is 
asked  to  invest  in  a  security  he  knows  very  little  about,  there 
will  likely  be  trouble  unless  a  campaign  of  education  aimed  to 
explain  the  desirability  al  these  investments,  is  inaugurated 

There  should  be  no  question  as  to  the  desirability  of  these 
investments  if  the  corporations  offering  them,  extend  to  the 
public  the  opportunity  to  carefully  examine  the  collateral 
bdiind  them. 

Herewith  is  the  complete  text  of  the  Edge  Act: 

An  act  to  amend  the  act  approved  Decent  23,  1918» 
known  as  the  Federal  Reserve  Act. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  United  States  of  America  in  Congress  assembled.  That 
the  Act  approved  December  83, 1913,  known  as  the  Federal 


AMERICAN  BANKS  IN  FOREIGN  TRADE  319 


Reserve  Act,  as  amended,  be  further  amended  by  adding  a 
new  section  as  follows: 

"Banking  corporations  to  do  foreign  banking  business. 

''Sec  96  (a)  G>rporations  to  be  organized  for  the  purpose 
of  engaging  in  international  or  foreign  banking  or  other  inter- 
national or  foreign  financial  operations,  or  in  banking  or  other 
financial  operations  in  a  dependency  or  insular  possession  of 
the  United  States,  either  directly  or  through  the  agency,  own- 
ership, or  control  of  local  institutions  in  foreign  countries,  or 
in  such  dependencies  or  insular  possessions  as  pro'dded  by 
this  section,  and  to  act  when  required  by  the  Secretary  of  the 
Treasury  as  fiscal  agents  of  the  United  States,  may  be  formed 
by  any  number  of  natural  persons,  not  less  in  any  case  than 
five. 

''Such  persons  shall  enter  into  articles  of  association  which 
shall  specify  in  general  terms  the  objects  for  which  the  asso- 
ciation is  formed,  and  may  contain  any  other  provisions  not 

inconsistent  with  law  which  the  association  may  see  fit  to 
adopt  for  the  regulation  of  its  business  and  the  conduct  of  its 

aflfairs. 

"Such  articles  of  association  shall  be  signed  by  all  of  the 
persons  intending  to  participate  in  the  organization  of  the  cor- 
poration and,  thereafter,  shall  be  forwarded  to  the  Federal 
Reserve  Board,  and  shall  be  filed  and  preserved  in  its  office. 
The  person  signing  the  said  articles  of  association  shall,  under 
their  hands,  make  an  organization  certificate  which  shall  ^e* 
dfically  state: 

'^First.  The  name  assumed  by  such  corporation,  which  shall 
be  subject  to  the  approval  of  the  Federal  Reserve  Board. 
''Second.   The  place  or  places  where  its  operations  are  to 

be  carried  on. 

"Third.  The  place  in  the  United  States  where  its  home 
office  is  to  be  located. 

"Fourth.  The  amount  of  its  capital  stock  and  the  number 

of  shares  into  which  the  same  shall  be  divided. 

"Fifth.  The  names  and  places  of  business  or  residence  of 
the  persons  executing  the  certificate  and  the  number  of  shares 
to  which  each  has  subscribed. 

"Sixth.  The  foct  that  the  certificate  is  made  to  enable  the 
persons  subscribing  the  same  and  all  other  persons,  firms, 
companies,  and  corporations,  who  or  which  may  thereafter 
subscribe  to  or  purchase  shares  of  the  capital  stock  of  sudU 


880  EXPORTING  TO  THE  WORLD 


corporation,  to  avail  t^iemselves  of  the  advantages  of  this 

section. 

'The  person  signing  the  Ofganizatimi  certificate  shall  duly  ac- 
knowledge the  oeecution  thereof  before  a  judge  of  some  court 
of  record  or  notary  public,  who  shall  certify  thereto  under  the 
seal  of  such  court  or  notary,  and  thereafter  the  certificate  shall 
be  forwarded  to  the  Federal  Reserve  Board  to  be  filed  and 
preserved  in  this  office.  Upon  duly  making  and  filing  articles 
of  assodatkm  and  an  organization  certificate,  and  after  the 
Federal  Reserve  Board  has  approved  the  same  and  issued  a 
permit  to  begin  business  the  association  shall  become  and  be 
a  body  corporate,  and  as  such  and  by  the  name  designated 
therein  shall  have  power  to  adopt  and  use  a  corporate  seal, 
which  may  be  changed  at  the  pleasure  of  its  board  of  directors ; 
to  have  successkm  for  a  period  of  80  years  unless  sooner  dis- 
solved by  the  act  of  the  shareholders  owning  two-thirds  of 
the  stock  or  by  an  Act  of  Congress  or  unless  its  franchises 
become  forfeited  by  some  violation  of  the  law;  to  make  con-^ 
tracts ;  to  sue  and  be  sued,  complain,  and  defend  in  any  court 
of  law  or  equity;  to  elect  or  appoint  dtrec|ors»  all  of  whom 
shall  be  citizens  of  the  United  Slates ;  and»  by  its  board  of  direc- 
tors, to  appoint  such  officers  and  employes  as  may  be  deemed 
proper,  define  their  authority  and  duties,  require  bonds  of 
them  and  fix  the  penalty  thereof;  dismiss  such  officers  or  em- 
ployes or  any  thereof  at  pleasure,  and  appdnt  others  to  fill 
their  places;  to  prescribe^by  its  board  of  durectors,  by-laws  not 
inconsistent  with  law,  or  with  the  regulations  of  the  Federal 
Reserve  Board  regulating  the  manner  in  which  its  stock  shall 
be  transferred,  its  directors  elected  or  appointed,  its  officers 
and  employees  appointed,  its  property  transferred,  and  the 
privileges  granted  to  it  by  law  exercised  and  enjoyed. 

''Each  aMrporatkm  so  organized  diall  have  power,  under 
such  rules  and  r^^tbns  as  the  Federal  Reserve  Board  may 
prescribe : 

"(a)  To  purchase,  sell,  discount,  and  negotiate,  with  or 
without  its  endorsement  or  guarantee,  notes,  drafts,  checkSp 
bills  of  exchange,  acceptances,  including  bankers'  acceptances, 
cable  transfers  and  otiier  evidences  of  indebtedness;  to  pur- 
^ase  and  sdl  with  or  without  its  endorsement  or  guarantee, 
securities,  including  the  obligations  of  the  United  States  or 
of  any  state  thereof  but  not  including  shares  of  stock  in  any 
corporation  except  as  herein  provided;  to  accept  bills  or  drafts 


AMERICAN  BANKS  IN  FOREIGN  TRADE  321 


drawn  upon  it  subject  to  such  limitations  and  restrictions  as 
the  Federal  Reserve  Board  may  impose;  to  issue  letters  of 
credit;  to  purchase  and  sell  coin,  bullion,  and  exchange;  to 

borrow  and  to  lend  money;  to  issue  debentures,  bonds,  and 
promissory  notes  under  such  general  conditions  as  to  security 
and  such  limitations  as  the  Federal  Reserve  Board  may  pre- 
scribe,  but  in  no  event  having  liabilities  outstanding  thereon 
at  any  one  time  exceeding  ten  times  its  capital  stock  and  sur- 
plus; to  receive  deposits  outside  of  the  United  States  and  to 
receive  only  such  deposits  within  the  United  States  as  may 
be  incidental  to  or  for  the  purpose  of  carrying  out  transactions 
in  foreign  countries  or  dependencies  or  insular  possessions  of 
the  United  States ;  and  generally  to  exercise  such  powers  as 
are  incidental  to  the  powers  conferred  by  this  act  or  as  may 
be  usual,  in  the  determination  of  the  Federal  Reserve  Board, 
in  connection  with  the  transaction  of  the  business  of  banking 
or  other  financial  operations  in  the  countries,  colonies,  de- 
pendencies, or  possessions  in  which  it  shall  transact  business 
and  not  inconsistent  with  the  powers  specifically  granted 
herein.  Nothing  contained  in  this  section  shall  be  construed 
to  prohibit  the  Federal  Reserve  Board,  under  its  power  to 
prescribe  rules  and  regulations,  from  limiting  the  aggregate 
amount  of  liabilities  of  any  or  all  classes  incurred  by  the  cor- 
poration and  outstanding  at  any  one  time.  Whenever  a  cor- 
poration organized  under  this  section  receives  deposits  in  the 
United  States  authorized  by  this  secticm  it  shall  carry  reserves 
in  such  amounts  as  the  Federal  Reserve  Board  may  prescribe 
but  in  no  event  less  than  ten  per  centum  of  its  deposits. 

"(b)  To  establish  and  maintain  for  the  transaction  of  its 
business  and  branches  or  agencies  in  foreign  countries,  their 
dependencies  or  colonies,  and  in  the  dependencies  or  insular 
possessions  of  the  United  States,  at  such  places  as  may  be 
approved  by  the  Federal  Reserve  Board  and  under  such  rules 
and  regulations  as  it  may  prescribe,  including  countries  or 
dependencies  not  specified  in  the  original  organization  cer- 
tificate. 

''(c)  With  the  consent  of  the  Federal  Reserve  Board  to 
purchase  and  hold  stock  or  other  certificates  of  ownership  in 

any  other  corporation  organized  under  the  provisions  of  this 
section,  or  under  the  laws  of  any  foreign  country,  or  a  colony 
or  dependency  thereof,  or  under  the  laws  of  any  state,  de- 
pendency or  insular  possession  of  the  United  States,  but  not 


323  EXPORTING  lO  THE  WORLD 


ciigaged  in  the  general  business  of  buying  or  selling  goods, 
wares,  merchandise  or  commodities  in  the  United  States,  and 
not  transacting  business  in  the  United  Stages,  except  such  as  in 
the  judgment  of  the  Federal  Reserve  Board  may  be  incidental 
to  its  international  or  foreign  business:  ProvMed,  however, 
that,  except  with  the  approval  of  the  Federal  Reserve  Board, 
no  corporation  organized  hereunder  shall  invest  in  any  one 
corporation  an  amount  in  excess  of  10  per  centum  of  its  own 
capital  and  surplus,  except  in  a  corporation  engaged  in  the 
business  of  bankings  when  15  per  centum  of  its  capital  and 
surplus  may  be  so  invested :  Provided,  further,  that  no  corpo- 
ration organized  hereunder  shall  pmrchase,  own,  or  hold  stock 
or  certificates  of  ownership  in  any  other  corporation  organized 
hereunder  or  under  the  laws  of  any  state  which  is  in  substan- 
tial competition  therewith,  or  which  holds  stock  or  certificates 
of  ownonship  in  corporations  which  are  in  substantial  com- 
petition with  the  pttrchssing  corporatioii. 

**Nothing  contained  herein  shall  prevent  corporations  or- 
ganized hereunder  from  purchasing  and  holding  stock  in  any 
corporation  where  such  purchase  shall  be  necessary  to  prevent 
a  loss  upon  a  debt  previously  contracted  in  good  faith ;  and 
Stock  30  purchased  or  acquired  in  corporations  organized  under 
this  section  shall  within  six  months  from  such  purchase  be  sold 
or  disposed  of  at  public  or  private  sale  unless  the  time  to  so 
dispose  of  same  is  extended  by  the  Federal  Reserve  Board. 

"No  corporation  organized  under  this  section  shall  carry  on 
any  part  of  its  business  in  the  United  States  except  such  as, 
in  the  judgment  of  the  Federal  Reserve  Board»  shall  be  inci- 
dental to  its  international  or  foreign  business.  And,  provided 
further,  that  except  such  as  is  incidental  and  preliminary  to 
Its  organization  no  such  corporation  shall  exercise  any  other 
powers  conferred  by  this  section  until  it  has  been  duly  author- 
ized by  the  Federal  Reserve  Board  to  commence  business  as 
a  corporation  oiganized  under  the  fnrovisions  of  this  secticm. 

^No  corporation  organized  under  this  section  shall  engage 
in  commerce  or  trade  in  commodities  except  as  specifically 
provided  in  this  section,  nor  shall  it  either  directly  or  indi- 
rectly control  or  fix  or  attempt  to  control  or  fix  the  price  of 
any  such  commodities.  The  charter  of  any  corporation  vio- 
lating this  provision  shall  be  subject  to  forfeiture  in  a  manner 
hereinafter  provided  in  this  section.  It  shall  be  unlawful  for 
any  director,  officer,  agent,  or  employe  of  any  loch  corpora- 


AMERICAN  BANKS  IN  FOREIGN  TRADE  383 


tion  to  use  or  to  conspire  to  use  the  credit,  the  funds,  or  the 
power  of  the  corporation  to  fix  or  control  the  price  of  any 
such  commodities,  and  any  such  person  violating  this  pro- 
vision shall  be  liable  to  a  fine  of  not  less  dian  $1,000  and  not 
exceeding  $5,000  or  imprisonment  not  less  than  one  year  and 
not  exceeding  five  years  or  both,  in  the  discretion  of  the  court. 

"No  corporation  shall  be  organized  under  the  provisions  of 
this  section  with  a  capital  stock  of  less  than  $2,000,000,  one 
quarter  of  which  must  be  paid  in  before  the  corporation  may 
be  authorized  to  b^^in  business,  and  the  remainder  of  the 
capital  stock  of  such  corporation  shall  be  paid  in  instalhnents 
of  at  least  ten  percentum  on  the  whole  amount  to  which  the 
corporation  shall  be  limited  as  frequently  as  one  installment 
at  the  end  of  each  succeeding  two  months  from  the  time  of 
the  commencement  of  its  business  operations,  until  the  whole 
of  the  capital  stock  shall  be  paid  in.  The  capital  stock  of 
any  such  corporation  may  be  increased  at  any  time,  with  the 
approval  of  the  Federal  Reserve  Board,  by  a  vote  of  two- 
thirds  of  its  share  holders  or  by  unanimous  consent  in  writing 
of  the  share  holders  without  a  meeting  and  without  a  formsd 
vote,  but  any  such  increase  of  capital  shall  be  fully  paid  in 
within  ninety  da3rs  after  such  approval;  and  may  be  reduced 
in  like  manner,  provided  that  in  no  event  shall  it  be  less  than 
two  million  dollars.  No  corporation,  except  as  herein  pro- 
vided, shall  during  the  time  it  shall  continue  its  operations, 
withdraw  or  permit  to  be  withdrawn,  either  in  the  form  of 
dividends  or  otherwise,  any  portion  of  its  capital.  Any  na- 
tional banking  association  may  invest  in  the  stock  of  any 
corporation  organized  under  the  provisions  of  this  section, 
but  the  aggregate  amount  of  stock  held  in  all  corporations 
engaged  in  business  of  the  kind  described  in  this  section  and 
in  Section  25  of  the  Federal  Reserve  Act  as  amended  shall 
not  exceed  ten  per  centum  of  the  subscribing  bank's  capital 
and  surplus. 

**A  majority  of  the  shares  of  the  capital  stock  of  any  such 
corporation  shall  at  all  times  be  held  and  owned  by  citizens 
of  the  United  States,  by  corporations  the  controlling  interest 
in  which  is  owned  by  citizens  of  the  United  States,  chartered 
under  the  laws  of  the  United  States  or  of  a  state  of  the  United 
States,  or  by  firms  or  companies,  the  controlling  interest  in 
which  is  owned  by  citizens  of  the  United  States.  The  pro- 
visions of  Section  8  of  the  Act  approved  October  15,  1914, 


324  EXPORTiNG  TO  THE  WORLD 


entitled  "An  Act  to  Supplement  existing  laws  against  unlaw- 
ful restraints  and  monopolies  and  for  other  purposes,"  as 
amended  by  the  Acts  of  May  15,  1916,  and  September  7,  1916, 
shall  be  construed  to  apply  to  the  directors,  other  officers, 
agents,  or  employes  of  corporations  oiganized  under  the  pro- 
visions of  this  section :  Provided,  however,  that  nothing  herein 
contained  shall  (1)  prohibit  any  director  or  other  officer, 
agent  or  employe  of  any  member  bank,  who  has  procured  the 
approval  of  the  Federal  Reserve  Board  from  serving  at  the 
same  time  as  a  director  or  other  officer,  agent,  or  employe 
of  any  corporation  organized  under  the  provisions  of  this 
section  in  whose  capital  stock  such  member  banks  shall  have 
invested ;  or  (2)  prohibit  any  director  or  other  officer,  agent, 
or  employe  of  any  corporation  organized  under  the  provisions 
of  this  section,  who  has  procured  the  approval  of  the  Federal 
Reserve  Board,  from  serving  at  the  same  time  as  a  director 
or  other  officer,  agent  or  employe  of  any  other  corporation  in 
whose  capital  stock  such  first  mentioned  corporatioa  shall 
have  invested  under  the  provisions  of  this  act 

**No  member  of  the  Federal  Reserve  Board  shall  be  an 
officer  or  director  of  any  corporation  organized  under  the 
provisions  of  this  section,  or  of  any  corporation  engaged  in 
similar  business  organized  under  the  laws  of  any  state,  nor 
hold  stock  in  any  such  corporation,  and  before  entering  upon 
his  duties  as  a  member  of  the  Federal  Reserve  Board  he  shall 
certify  under  oath  to  the  Secretary  of  the  Treasury  that  he 
has  complied  with  this  requirement. 

"Shareholders  in  any  corporation  organized  under  the  pro- 
visions of  this  section  shall  be  liable  for  the  amount  of  their 
unpaid  stock  subscriptions.  No  such  oorpormtion  shall  be- 
come a  member  of  any  Federal  Reserve  Bank. 

••Should  any  corporation  organized  hereunder  violate  or 
fail  to  comply  with  any  of  the  provisions  of  this  section,  all 
of  its  rights,  privileges,  and  franchises  derived  herefrom,  may 
thereby  be  forfeited.  Before  any  such  corporation  shall 
be  declared  dissolved,  or  its  rights,  privil^^es,  and  franchises 
forfeited,  any  noncompliance^  with,  or  violation  of  such  laws, 
shall,  however,  be  determined  and  adjudged,  by  a  court  of  the 
United  States  of  competent  jurisdiction  in  a  suit  brought 
for  that  purpose  in  the  district  or  territory  in  which 
the  home  office  of  such  corporation  is  located,  which  suit  shall 
be  brought  by  the  United  States  at  the  instance  of  the  Fed- 


AMERICAN  BANKS  IN  FOREIGN  TRADE  325 


eral  Reserve  Board  or  the  Attorney  Genend.  Upon  adjudica- 
tion of  such  noncompliance  or  violation,  each  director  and 

officer  w^ho  participated  in,  or  assented  to,  the  illegal  act  or 
acts,  shall  be  liable  in  his  personal  or  individual  capacity  for 
all  damages  which  the  said  corporation  shall  have  sustained 
in  consequence  thereof.  No  dissolution  shall  take  away  or 
impair  any  remedy  against  the  corporation,  its  stockholders, 
or  officers  for  any  liability  or  penalty  previously  incurred. 

''Any  such  corporation  may  go  into  voluntary  liquidation 
and  be  closed  by  a  vote  of  its  shareholders  owning  two-thirds 
of  its  stock. 

''Whenever  the  Federal  Reserve  Board  shall  become  satis- 
fied of  the  insolvency  of  any  such  corporatk>n,  it  may  appoint 
a  receiver  who  shall  take  possession  of  all  of  the  property  and 

assets  of  the  corporation  and  exercise  the  same  rights,  privi-* 
ieges,  powers,  and  authority  with  respect  thereto  as  are  now 
exercised  by  receivers  of  national  banks  appointed  by  the 
Comptroller  of  the  Currency  of  the  United  States.  Provided, 
however,  that  the  assets  of  the  corporation  subject  to  the  laws 
of  other  countries  or  jurisdictions  shall  be  dealt  with  in  ac- 
cordance with  the  terms  of  such  laws. 

"Every  corporation  organized  under  the  provisions  of  this 
section  shall  hold  a  meeting  of  its  stockholders  annually  upon 
a  date  fixed  in  its  bylaws,  such  meeting  to  be  held  at  its  home 
office  in  the  United  States.  Every  such  corporation  shall  keep 
at  Its  home  office  books  containing  the  names  of  all  stock- 
holders thereof,  and  the  names  and  addresses  of  all  members 
of  its  board  of  directors,  together  with  copies  of  all  reports 
made  by  it  to  the  Federal  Reserve  Board  .  Every  such  corpo- 
ration shall  make  reports  to  the  Federal  Reserve  Board  at  such 
times  and  in  such  form  as  it  may  require;  and  shall  be  subj^ 
to  examination  once  a  year  and  at  such  other  times  as  may  be 
deemed  necessary  by  the  Federal  Reserve  Board  by  examiners 
appointed  by  the  Federal  Reserve  Board,  the  cost  of  such 
^*^niinaty?"ff,  including  the  compensation  of  the  examiners 
to  be  fixed  the  Federal  Reserve  Board  and  to  be  paid  by 
the  corporation  examined. 

'•The  directors  of  any  corporation  organized  under  the  pro- 
visions of  this  section  may,  semiannually,  declare  a  dividend 
of  so  much  of  the  net  profits  of  the  corporation  as  they  shall 
judge  ei^edioit;  but  each  corporation  shall,  before  the  dec- 
linttkNi  of  a  dhrUcnd  iurj  (me-tentfi  ol  its  net  profits  of  the 


m  EXPORTING  TO  THE  WORLD 


pmeding  half  year  to  its  sturplus  fund  until  the  same  diall 
amount  to  20  per  centum  of  its  capital  stock. 

"Any  corporation  organized  under  the  provisions  of  this 
section  shall  be  subject  to  tax  by  the  State  within  which  its 
home  office  is  located  in  the  same  manner  and  to  the  same 
cadent  as  other  corporations  organized  under  the  laws  of  that 
State  which  are  transacting  a  similar  character  of  business. 
The  shares  of  stock  in  such  corporation  shall  also  be  subject 
to  tax  as  the  personal  property  of  the  owners  or  holders 
thereof  in  the  same  manner  and  to  the  same  extent  as  the 
shares  of  stock  in  similar  State  corporations:  Provided,  how- 
ever. That  such  shares  owned  by  nonresidents  of  any  State 
shall  be  taxed  only  in  the  city  or  town  in  which  the  corpora- 
tion's home  office  is  located,  and  not  elsewhere. 

"Any  corporation  organized  under  the  provisions  of  this 
section  may  at  any  time  within  the  two  years  next  previous 
to  the  date  of  the  expiration  of  its  corporate  existence,  by  a 
vote  of  the  shareholders  owning  two-thirds  of  its  stock,  apply 
to  the  Federal  Reserve  Board  for  its  approval  to  extend  the 
period  of  its  corporate  existence  for  a  term  of  not  more  than 
twenty  years,  and  upon  certified  approval  of  the  Federal  Re- 
serve Board  such  corporation  shall  have  its  corporate  exist- 
ence for  such  extended  period  unless  sooner  dissolved  by  the 
act  of  the  shareholders  owning  two-thirds  of  its  stock,  or  by 
an  act  of  Congress  or  unless  its  franchise  becomes  forfeited 
by  some  violation  of  law. 

"Any  bank  or  banking  institution  principally  engaged  in  a 
foreign  business  incorporated  by  special  law  of  any  State  or 
of  the  United  States  or  organized  under  the  general  laws  of 
any  State  or  of  the  United  States  and  having  an  unimpwed 
capital  sufficient  to  entitle  it  to  become  a  corporation  under 
the  provisions  of  this  section  may  by  the  vote  of  the  share- 
holders owning  not  less  than  two-thirds  of  the  capital  stock 
of  such  bank  or  banking  association,  with  the  approval  of  the 
Federal  Reserve  Board,  be  converted  into  a  Federal  corpora* 
tioii  of  the  kind  authorized  by  this  section  with  any  name 
approved  by  the  Federal  Reafrve  Board:  Provided,  however. 
That  said  conversi<m  shall  not  be  in  contravention  of  the 
State  law.  In  such  case  the  articles  of  association  and  organi- 
zation certificate  may  be  executed  by  a  majority  of  the  direc- 
tors of  the  bank  or  banking  institution,  and  the  certificate 
shall  declare  that  the  owners  of  at  least  two-thirds  of  the 


AMERICAN  BANKS  IN  FOREIGN  TRADE  887 


capital  stock  have  authorized  the  directors  to  make  such  certi- 
ficate and  to  change  or  convert  the  bank  or  banking  institution 
into  a  Federal  corporation.  A  majority  of  the  directors,  after 
executing  the  articles  of  association  and  the  organization 
certificate,  shall  have  power  to  execute  all  other  papers  and 
to  do  whatever  may  be  required  to  make  its  organization 
perfect  and  complete  as  a  Federal  corporation.  The  shares 
of  any  such  corporation  may  continue  to  be  for  the  same 
amount  each  as  they  were  before  the  conversion,  and  the 
directors  may  continue  to  be  dkectors  of  the  corporation  until 
others  are  elected  or  appointed  in  accordance  with  the  pro- 
visions of  this  section.  When  the  Federal  Reserve  Board  has 
given  to  such  corporation  a  certificate  that  the  provisions  of 
tills  section  have  been  complied  with,  such  corporation  and 
all  its  stockholders,  officers,  and  employes,  shall  have  the 
same  powers  and  privileges,  and  shall  be  subject  to  the  same 
duties,  liabilities,  and  regulations,  in  all  respects,  as  shall 
have  been  prescribed  by  this  section  for  corporations  origi- 
nally organized  hereunder. 

"Every  officer,  director,  clerk,  employee,  or  agent  of  any 
corporation  organized  under  this  section  who  embezzles,  ab- 
stracts, or  willfully  misapplies  any  of  the  moneys,  funds, 
credits,  securities,  evidences  of  indebtedness  or  assets  of  any 
character  of  such  corporation ;  or  who,  without  authority  from 
the  directors,  issues  or  puts  forth  any  certificate  of  deposit, 
draws  any  order  or  bill  of  exchange,  makes  any  acceptance, 
as^gns  any  note,  bond,  debenture,  draft,  bill  of  exchange, 
mortgage,  judgment,  or  decree;  or  who  makes  any  i^se  entry 
in  any  book,  report,  or  statement  of  such  corporation  with 
intent,  in  either  case,  to  injure  or  defraud  such  corporation  or 
any  other  company,  body  politic  or  corporate,  or  any  indi- 
vidual person,  or  to  deceive  any  officer  of  such  corporation, 
the  Federal  Reserve  Board,  or  any  agent  or  examiner  appoint- 
ed to  examine  the  affairs  of  any  such  corporation ;  and  every 
receiver  of  any  such  corporation  and  every  clerk  or  employee 
of  such  receiver  who  shall  embezzle,  abstract,  or  willfully 
misapply  or  wrongfully  convert  to  his  own  use  any  moneys, 
funds,  credits,  or  assets  of  any  character  which  may  come 
into  his  possession  or  under  his  control  in  the  execution  of 
his  trust  or  the  performance  of  the  duties  of  his  employment; 
and  every  such  receiver  or  clerk  or  employee  of  such  receiver 
who  shall,  with  intent  to  injure  or  defraud  any  person,  body 


328  EXPORTING  TO  THE  WORLD 


politic  or  corporate,  or  to  deceive  or  mislead  the  Federal 
Reserve  Board,  or  any  agent  or  examiner  appointed  to  eac 
amine  the  a&irs  of  such  receiver,  shall  make  any  false  entry 
in  any  book,  report,  or  record  of  any  matter  connected  with 
the  duties  of  such  receiver;  and  every  person  who  with  like 
intent  aids  or  abets  any  officer,  director,  clerk,  employee,  or 
agent  of  any  corporation  organized  under  this  section,  or  re- 
ceiver or  clerk  or  employee  of  such  receiver  as  aforesaid  in 
any  viohition  of  this  sectbn,  shall  upon  conviction  thereof  be 
imprisoned  for  not  less  than  two  3rcars  nor  more  than  ten 
years,  and  may  also  be  fined  not  more  than  $5,000,  in  the 
discretion  of  the  court. 

"Whoever  being  connected  in  any  capacity  with  any  cor- 
pcmtion  organized  under  this  section  represents  in  any  way 
that  the  United  States  is  liable  for  the  payment  of  any  bond 
or  other  obligation,  or  the  interest  thereon,  issued  or  incurred 
by  any  corporation  organized  hereunder,  or  that  the  United 
States  incurs  any  liability  in  respect  of  any  act  or  omission 
of  the  corporation,  shall  be  punished  by  a  fine  of  not  more 
than  $10,000  and  by  imprisonment  for  not  more  than  ive 
years.** 

Passed  the  Senate  September  9,  1919. 

Attest:  GEORGE  A.  SANDERSON,  Secretary. 

Passed  the  House  of  Representatives,  November  7,  1919. 

Attest:  WM.  TYLER  PAGE,  Qerk. 

Making  Investments 
In  Fanigm  ComUnn 

f  Our  commercial  relations  with  other  foreign  countries  should 
not  cease  with  our  mere  desire  to  sell  them  what  we  have  got 
We  must  show  a  sincere  interest  in  the  devdopment  of  their  own 
countries  as  well.  There  are  many  countries  in  the  world — par- 
ticularly in  South  America — that  are  still  in  a  primitive  stage  of 
development.  They  need  financial  assistance  for  their  internal 
improvements.  They  need  highways,  railroads,  drainage  sys- 
tems, water  works,  devek^mient  of  water  power  sites,  and  harbor 
improvements.  We  haveiiecn  urged  to  keep  away  from  nu^di^ 
these  investments  in  foreign  countries;  we  have  been  tdd  that 
the  Germans  tried  it,  and  that  the  Germans  failed.  But  they 
failed  because  they  tried  unscrupulous  methods.  They  tried  to 
jam  "Made-in-Germany"  goods  down  the  throats  of  the  people 
they  helped  with  thdr  gokL  Howcm»  the  poU^  of  maldng 


AMERICAN  BANKS  IN  FOREIGN  TRADE  329 


investments  seems  to  be  a  perfectly  sound  plan  of  coopera- 
tion. England's  investments  in  Argentina,  alone,  are  over 
two  billion  dollars,  and  yet  witiiout  following  the  German 
method  she  has  worked  up  the  largest  tirade  with  Argentina 
of  any  other  nation. 

Treaties  join  us  with  other  nations  of  the  world  politically. 
They  should  join  us  commercially  as  well.  Proof  of  our  sin- 
cerity in  the  f  uldUment  of  our  moral  obligations  should  not  be 
given  in  words  alone.  It  should  be  interpreted  in  deeds.  There 
are  many  countries  today  that  need  capital  for  bettering  their 
condition  in  life;  for  internal  improvements  that  will  make  their 
people  more  prosperous,  and  more  independent  of  poverty.  Pros- 
perity at  home  dq^ends  very  much  on  the  prosperity  of  all 
classes.  If  the  farmer  has  a  poor  crop,  every  other  branch  of 
industry  will  feel  it.   It  is  the  same  way  with  countries. 

if  the  nations  with  whom  we  wish  to  increase  our  business 
remain  tmdevebped,  their  buying  power  will  remain  undeveloped. 
If  we  use  our  reserve  gold  tO'develop  the  forests  and  agricul- 
ture of  Chile,  the  mines  of  Peru,  and  Bolivia,  and  the  minerals 
of  Ecuador  a  wave  of  prosperity  would  soon  sweep  that  section 
oi  the  gk>be  and  we  would  feel  it  The  pec^e  of  those  cotmtries 
would  have  more  money  with  which  to  buy  our  wares,  and  what 
is  more  important,  we  would  enjoy  their  friendship  and  confi- 
dence which  is  necessary  in  our  relations  with  small  nations. 

We  must  not  go  into  the  business  of  lending  money  to  foreign 
nations  with  reckless  abandon,  however.  We  must  proceed  cau- 
tiously. 

In  connection  with  this  point  the  ''New  York  Journal  of 

Commerce"  in  an  editorial  said: 

"Almost  every  commercial  nation  in  the  world  is  today  looking 
to  the  United  States  as  the  source  of  its  supply  of  necessary 
capital  f<Mr  investment.  East  as  well  as  West,  the  situation  is 
the  same.  It  is  pointed  out  by  representatives  of  eadi  country 
that  after-war  conditions  render  self-dependence  impossible  and 
that  a  surplus  of  imports  over  exports  is  practically  necessary 
if  the  national  economic  interest  and  well-being  is  to  be  preserved 
and  its  progress  is  to  continue.  There  are  a  few  parts  of  the 
earth  where  this  demand  is  not  felt  and  which  expect  and  wish 
to  go  on  selling  us  more  than  they  import  Most  of  these  regions 
are  in  South  America  and  tiiey  rqiresent  sections  of  trade  whidi 
are  hardly  mor^  fpr  the  greater  part,  than  of  secot^ry  desira- 


I 


m  EXPORTING  TO  THE  WORLD 

bility.  The  opposite  condition — ^that  which  calls  for  more  im- 
ports from  Us  than  it  can  supply  exports  to  us — is  more  generally 
dbaiacteristk.  It  is  a  situation  of  first  in^XNtance  to  our  f  uture 
financial  and  investment  policy  as  well  as  to  our  own  trade. 

".What  the  present  international  position  of  affairs  really  sig- 
nifies is  that  the  United  States  is  offered  practically  its  chmce 
of  the  ^investments  of  the  world.  GMmtries  which  cannot  pay 
us  by  return  shipments  of  goods — as  most  cannot — would  give 
us  securities,  a  share  of  their  future  prospects  and  development. 
This  is  a  natural  outcome  of  the  great  exertions  made  by  the 
European  countries  .during  the  war.  They  cannot  sup{dy  the 
fluid  capital  needed  other  by  tiidr  own  dtizens  or  by  Uie  inhabi- 
tants of  the  newer  countries,  and  the  latter  accordingly  turn  to 
us  for  direct  shipments  of  goods  which  they  will  settle  in  securi- 
ties since  they  cannot  pay  in  return  shipments  of  goods  or  money. 
Not  all  these  calls  can,  however,  be  heeded.  We  have  not  the 
suri^us  wealth  to  satisfy  them  if  we  would,  and  we  would  or 
ought  not  to  do  so  if  we  could,  since  such  action  would  imply 
still  greater  sacrifice  on  the  part  of  our  consuming  public  at 
home,  with  higher  prices  and  still  greater  industrial  difficulties 
than  must  now  be  met  As  things  stand,  we  must  pkk  and 
choose  our  fidds  of  acdvity  abroad,  and  must  not  only  select 
desirable  fields  of  investment  in  the  several  countries  but  must 
also  discriminate  between  the  countries  themselves. 

"The  problem  of  international  investment  now  presented  is 
not,  however,  mmple  or  susceptible  of  sdution  by  ordinary 
methods.  What  it  involves  is  really  the  selection  of  spheres  of 
trade  or  commercial  influence.  We  cannot  control  the  trade  of 
the  world  and  ought  not  to  try  to  do  so  even  if  it  were  possible. 
Foreign  capital,  in  the  future  as  in  the  past,  will  implant  itself 
beside  our  own  and  compete  with  it  Our  interest  on  invest- 
ments  and  the  eventual  liquidation  of  our  principal  must  be 
paid  largely  in  the  products  of  the  countries  to  which  we  now 
cfttmst  our  surt^us  funds.  Wise  chmce  of  fields  of  investments 
win  consider,  therefore,  not  only  the  immediate  safety,  security 
and  productiveness  of  our  funds,  but  also  the  probability  that 
future  political  conditions  in  the  countries  where  we  place  such 
funds  will  be  stable,  future  commercial  opportunities  encourag- 
ii^  and'future  export  trade  likely  to  grow  rather  than  to  decline. 
We  can  easily  place  our  loans  or  advances  where  they  encounter 


AMERICAN  BANKS  IN  FOREIGN  TRADE  331 


an  unfriendly  atmosphere,  have  to  suffer  from  hostile  or  dis- 
couraging conditions,  or  be  considered  merely  a  temporary  helpj 
instead  of  the  foundation  of  a  permanent  business  relationship.! 
Investments  of  such  a  kind,  even  if  scrupulously  repaid,  prind- 
pal  and  interest,  would  be  largely  wasted.  They  would  fail  of 
attaining  their  chief  international  significance  since  they  would 
not  have  laid  the  foundation  for  future  business.'' 

Foreign  Investmenis 

Create  Permanent  Market 

The  virtue  of  making  foreign  investments  lies  in  the  fact  that 
thipy  lay  the  foundation  for  permanent  and  future  business.  If 
some  South  American  country,  for  instance,  borrows  money 

with  which  to  build  a  railroad,  in  all  probability  some  American 
factory  will  furnish  the  rails,  another  the  cars  and  locomotives, 
and  still  another  the  structural  machinery.  We  make  our  in- 
vestments in  this  form,  and  take  in  return  tihe  stocks  and  bcmds  of 
the  railroad.  Our  home  industries  are  influenced  by  the  purchase 
of  these  foreign  securities  by  the  creation  of  a  market  for  their 
products. 

It  is  difficulty  however,  to  induce  American  investors  to  place 
their  money  in  foreign  securities  unless  they  are  assured  of  the 

soundness  of  the  loan.  It  is  no  easy  matter  to  induce  investors 
to  place  their  money  in  isolated  districts  within  the  United  States 
proper,  let  alone  thousands  of  miles  away  in  an  unknown  land 
with  strange  customs,  different  laws  and  commercial  habits. 
Before  Uie  practice  of  making  investments  in  foreign  countries 
becomes  a  popular  mie,  therefore,  it  will  be  necessary  to  show 
the  American  investor  that  it  is  just  as  simple  and  safe  to  loan 
out  money  in  Argentina,  or  in  South  Africa  as  it  is  in  any  part 
of  the  United  States.  He  must,  however,  have  complete  infor- 
mation from  every  angle  so  that  the  barrier  of  prejudice  may 
be  completely  reduced.  He  must  know  somediing  about  the 
character  of  the  people  he  is  asked  to  do  business  with.  He  must 
know  something  about  their  daily  habits  of  life,  whether  they 
are  industrious,  thrifty  and  honest.  He  must  be  fully  informed 
as  to  the  stability  of  the  government  and  the  sincerity  of  those 
who  are  at  the  head  of  it  When  he  has  been  given  all  this  in- 
formation then  it  is  time  to  interest  him  in  the  matter  of  making 
proper  hmitments  k  foreign  countries. 


! 
I 


m  EXPORTING  TO  THE  WORLD 

The  American  people  must  become  active  in  foreign  fields. 
We  are  already  leading  the  way  in  exportations.  We  should  now 
help  oar  customers  financially  if  they  need  help.  If  we  have  the 
capital  which  would  make  industry  hum  in  a  country  which  has 
been  apparently  indifferent  to  industrial  progress  we  should 
place  it  at  the  disposal  of  that  country  as  long  as  it  complies  with 
Ae  conditions.  We  can  make  our  own  country  richer  by  making 
our  neighbors  richer.  If  we  increase  the  purchasing  power  of 
the  people  about  us,  it  will  mean  that  the  factories  in  the 
United  States  will  have  more  to  da 


CHAPTER  XX 


OUR  MERCHANT  MARINE 

It  has  been  said  that  a  great  merchant  marine  is  not  as  neqes* 
saiy  toward  the  building  of  a  foreign  trade  as  many  suspect  it  to 
be.  We  hear  people  upon  all  sides  declare  that  before  the  war 
when  oar  merchant  marine  was  practically  a  negligible  quanti^ 
in  comparison  to  the  merchant  fleets  of  other  nations  we  were  able 
to  secure  trade  in  foreign  nations  in  spite  of  the  handicap.  There 
is  some  txttHk  in  this,  of  course.  It  is  true  tiiat  we  sh^iped  our 
merchandise  in  foreign  holds  widiout  suffering  from  such  prac- 
tice, and  it  is  also  sound  to  declare  that  our  foreign  trade  can 
keq>  on  thriving  without  the  assistance  of  a  great  moxhant 
marine  to  carry  our  goods.  It  has  been  done  before;  naturally » 
it  can  be  done  again. 

But  times  are  dianging.  We  are  no  lm^;er  a  small  nation 
around  the  comer  taking  care  of.  occasaooal  orders  coming  from 
a  foreign  land.  We  are  now  expanding.  Our  sign  is  out  on  the 
front  door  reading:  "Uncle  Sam,  World  Trader."  We  must  ren- 
der service  to  our  new  made  customers.  If  we  do  not  some  other 
trader  will  It  was  all  very  well  tor  vato  permit  a  great  bulk 
of  our  merdiandise  to  be  carried  in  the  ships  of  our  competitors 
when  our  national  policy  did  not  justify  greater  activity  in 
world  commerce.  But  the  war  woke  up  the  American  people. 
Without  a  merchant  fle^t  we  found  oursdves  in  the  throes  of 
the  German  submarine  peril.  For  a  time  our  business,  without 
the  use  of  the  ships  that  were  at  our  disposal  before  the 
war,  was  being  shattered  to  pieces  because  we  could  no%  get 
tonnage  in  which  to  carry  merchandise.  We  turned  then  to 
the  Ic^cal  program:  to  build  our  own  ships,  and  we  have 
been  building  them  ever  since. 

The  building  up  of  a  merchant  marine  is  a  step  forward. 
Failure  to  maintain  our  shipping  policy  in  one  form  or  another 
—whether  under  private  or  Government  direction — means  a 

833 


334 


EXPORTING  TO  THE  WORLD 


step  backward,  regardless  of  what  we  were  able  to  do  without 
a  merciiaiit  marine  before  the  War  broke  out 

Europe's  Advantage 
ill  Ship  lonnage 

Belore  the  war  Europe  enjoyed  a  great  advantage  over  the 
United  States  in  that  she  had  direct  steamship  connections  with 
all  section  of  the  world.   Peoples  from  other  sections  of  the 

globe  chose  to  go  to  Europe  because  they  received  better  trans- 
portation accommodaticnis.  There  were  faster  steamers  con- 
necting European  ports  with  those  of  other  countries.  Mail  and 
freight  steamers  sailed  from  one  port  to  the  other  more  fre- 
quently. As  a  result  the  people  from  other  continents  pre- 
ferred Europe  rather  than  the  United  States.  The  frequency 
of  sufings  made  matters  very  easy  for  the  Knglishman  who 
wished  to  visit  his  branch  office  in  the  East  Indies  or  in  South 
America.  The  frequency  of  the  mails  made  it  possible  for  the 
European  merchant  to  keep  in  close  touch  with  his  customers 
overseas.  These  advantages  the  American  merchant  did  not  en- 
joy, and  the  lack  of  them  isolated  him  from  the  rest  of  thd 
world. 

A  merchant  marine  should  have  a  definite  object.  If  our  only 
reason  for  having  a  merchant  marine  is  to  carry  our  own  mer- 
chandise to  foreign  countries  then  a  merchant  marine  is  not  a 
necessary  institution.  We  can  revert  back  to  the  pre-war  days, 
and  permit  other  nations  to  cany  our  wares,  and  we  can  continue 
to  develop  our  foreign  business.  Rut  there  is  a  definite  object 
in  having  an  American  merchant  marine.  It  must  render 
service.  America  must  establish  fast  lines  between  the  prin- 
cipal ports  of  the  wc^d.  She  must  send  the  mails  to  distant 
ports  faster  than  they  were  ever  sent  before.  She  must  have 
frequent  sailings  not  only  of  freight  steamers  but  mail  and 
passenger  vessels  as  well.  If  we  are  to  co-operate  with  our 
enterprising  foreign  trade  merchants  we  must  be  able  to  ex- 
tend lliem  the  facilities  of  a  modem  up-to-date  delivery  and 
transportation  system  just  as  we  have  done  widiin  the  borders 
of  our  own  country.  A  merchant  marine  will  do  this. 

Speaking  before  the  Sixth  National  Foreign  Trade  Convention 
Frederick  J.  Koster,  President  of  the  San  Francisco  Chamber  of 
Commerce  said: 


OUR  MERCHANT  MARINE  335 


"We  need  in  large  measure  our  own  national  delivery  system, 
and  definite  trade  routes  must  be  established,  with  large  com- 
bination freight  and  passenger  ships,  with  regular  scheduled 
sailings  by  direct  routes  between  important  American  and  foreign 
ports  in  all  directions,  so  that  American  shippers  in  any  section 
of  our  countiy  may  have  the  benefit  of  through  transportation 
to  any  unportant  port  in  the  world.  This  will  mean  that  our  rail- 
road carriers  will  constitute  a  part  of  a  transportation  system 
that  does  not  end  at  coasts.  The  time  must  come  when,  at  every 
railroad  station  in  our  country,  time-tables,  schedules  and  inform- 
ation will  be  obtainable  by  any  shipper  concerning  the  route  and 
the  cost  of  carriage  to  every  port  in  the  world 

"These  things  are  not  only  posnble,  but  they  are  absolutely 
necessary,  and  they  mean  as  much  to  die  people  of  the  interior 
of  our  country  as  to  those  who  live  nearer  the  coasts." 

Spectacular  Growth 
of  Merchant  Marine 

The  United  States  in  1914  was  represented  in  the  trade  of 
ilhe  world  by  fifteen  seagoing  vessels  with  registers  ranging 
above  1,000  tons. 

According  to  figures  of  the  United  States  Shipping  Board 
issued  in  August  29, 1919,  the  United  SUtes  boasted  of  1,280 
vessels.  Befcm  the  war  she  was  down  at  the  bottom  of  the 
column,  so  to  speak.  The  merchandise  of  American  manu- 
facturers and  exporters  was  carried  in  the  holds  of  foreign 
shipowners.  Today  it  is  being  carried  in  holds  owned  by  the 
United  States  to  a  great  extent 

In  June  1914^  the  total  gross  tonnage  of  sh^s  flying  the  Ameri- 
can flag,  including  coastwise  shipping  and  the  fleet  operating 
on  the  Great  Lakes,  was  4,287,000  tons. 

In  June  1919,  its  gross  tonnage  was  11,983,000  tons,  an  in- 
crease of  278  per  cent,  chiefly  in  oceangoing  vessels. 

The  steam  tonnage  under  the  American  flag  is  now  24.8  per 
cent  of  the  steam  tonnage  of  tiie  worid.  The  figures  are  shown 
in  the  following  tables: 

The  world  steam  tonnage  of  100  gross  tons  and  over  on  June 
SO,  1919,  as  reported  by  Lloyds  was: 

Number  of  vessels  24,38*6 

Gross  tonnage  47397,000 

Deadweight  tomage  71,845,000 


/ 


m  EXPORTING  TO  THE  WORLD 

American  tonnage  of  100  gross  tons  and  over  on  June  80, 
1919,  including  tonnage  on  Great  Lakes,  was : 

Number  of  vessels  3,G87 

Gms  tonnage  U,983,000 

Deadweight  totmage  V!J»7Ajm 

Per  cent  of  world  steam  tonnage  of  100  grois  tons  and  over 
under  United  States  flag,  June  30, 1919 : 

Percent  of  number  •  15.1 

Percent  of  tonnage  24.8 

( These  percentage  figures  include  txmnage  on  the  Great  Lakes ) . 

How  Other  Ctmnfnes 

Suffered  During  War 

The  forgoing  figures  show  how  the  United  States  improvea 
her  positicm  in  shipping  during  the  war,  and  practically  out- 
distanced all  rivals  in  shipbuildiiig  activities.  Now  let  ns  tnra 
for  a  moment  to  see  what  happened  to  Great  Britain.  Great 
Britain  on  August  1,  1914,  possessed  18,691,000  gross  tons  of 
shipping,  lost  during  the  war  8,785,000  gross  tons.  At  the  sign- 
ing of  the  armistice,  November  11,  1918,  her  total  tonnage  was 
15,006,000  gross  tons. 

Germany  in  1914,  possessed  5,135,000  tons  of  shipping.  Her 
losses  amounted  to  9,700,000  tons.  Her  rqrfacement  by  new  con- 
struction  and  seizure  of  enemy  ships  was  950,000  tons.  Her 
fleet  at  the  time  of  the  armistice  amounted  to  3,385,000  tons. 

In  1914  Japan's  shipping  totalled  1,708,000  tons.  She  lost 
i275,000  tons.  She  built  885,000  tons  and  in  November,  1913 
possessed  a  total  of  2,318,000  tons,  showing  a  net  gain  of  610,000 
tons.  By  the  elimination  of  the  German  merchant  fleet,  Ji^pan 
now  stamis  third  in  the  list  of  maritime  nations. 

The  British  colonies  lost  875,000  tons  of  shipping  during  the 
war.  They  replaced  475,000  tons  and  increased  their  merchant 
fleet  from  1,632,000  tons  to  1,832,000  tons,  a  net  gain  of  200,000 
tons. 

Holland  showed  at  the  dose  of  the  war  a  net  gain  of  335,000 
tcms.  Her  total  fleet  increased  from  1,472,000  to  1,807,000  tons. 
Her  replacement  was  560,000  tons. 

Norway  lost  176,000  tons  out  of  1,957,000  tons.  Although 
she  made  a  replacement  of  775,000  tons  she  showed  at  the  end 
of  the  war  only  1,557,000  tons,  incurring  a  net  loss  of  400  tons. 
Mmvay  is  now  in  seventh  jOaoe  as  a  maritime  nation. 


OUR  MERCHANT  MARINE 


337 


France  had  1,923,000  tons  in  1914.  She  lost  905,000  tons,  re- 
placed 485,000  tons.  With  a  net  loss  of  480,000  tons  she  showed 
at  tiie  end  of  the  war  1,143,000  tons  of  shipping. 

Italy  was  a  heavy  loser.  At  the  beginning  of  the  war  Italy 
boasted  of  1,430,000  tons  for  her  foreign  commerce.  Of  this 
she  lost  857,000  tons.  Her  replacement  was  375,000  tons,  and 
after  the  war  she  had  only  930,000  tons  with  which  to  do  bun- 
ness  with  foreign  countries.  Her  total  loss  was  500,000  tons.  « 

The  total  worid  tonnage  in  1914  was  42,146,000  tons. 

The  total  world  losses  during  the  war  were  18,286,000  tons. 

The  total  world  replacement  was  15,049,000  tons 

The  total  world  net  loss  was  3,237,000  tons. 

Total  tonnage  of  world,  Nov.,  1918,  28,309,000  tons. 

The  f<»i^gouig  statistics  very  dosdy  show  how  the  United 
States  stands  today  m  the  shipping  industry  with  respect  to  the 
other  nations  of  the  world. 

Ocean  Routes  That 
Vessels  Follow 

The  American  merdiant  marine  is  constantly  adding  new  trade 
nmtes  to  its  schedule  and  it  is  said  that  American  ships  may 
now  be  seen  on  41  world  routes. 

The  chief  ones  may  be  said  to  fall  into  the  following  divisions: 

(A)  From  the  northeastern  ports  of  the  United  States  to  the 
British  ChanneL^Tlm  route  connects  the  leading  commercial 
nations  of  die  globe,  and  over  ft  passes  not  far  from  twenty  per 
cent  of  the  total  tonnage  of  the  world.  Skirting  the  United 
States  seaboard  to  the  Newfoundland  Banks,  it  then  curves 
across  the  Atlantic.  Branching  off  at  various  pomts  of  this 
route,  other  hues  touch  ports  of  £urc^  from  the  Mediterranean 
to  the  Balti<^  and  ports  of  America  from  the  Caribbean  Sea  to 
Canada. 

(B)  Prom  the  eastern  seaboard  of  the  United  States,  and  from 
southern  and  western  Europe,  through  the  Mediterranean  and 
the  Suez  Canal  to  China,  Japan  and  the  East  Indies. 

(C)  The  South  African  roM^r.-^Ibnnectmg  Athmtic  ports  of 
America  and  Europe  wiA  the  southern,  eastern  and  western 
coasts  of  Africa,  and  with  New  Zealand  and  Australia.  Sailing 
vessels  also  use  this  route  for  connections  with  the  Orient  and 
the  East  Indies,  their  inability  to  navigate  the  £ed  Sea  barrii^ 
the  Suez  Canal  route  to  them. 


m  EXPORTING  TO  THE  WORLD 


(D)  The  South  American  route,  from  North  Atlantic  to  South 
AmeiicaQ,  east  and  west  coast,  ports. 

(E)  The  route  ammd  Somih  Amerka,  comiectiiig  Amerkan 

and  European  Atlantic  ports  with  the  Pacific  coast  to  the  Americas. 

(F)  The  Gulf  and  Caribbean  route,  affording  access  to  the 
p(Mts  of  the  United  States  Gulf  Coast,  Mexico,  Central  America, 
the  nor&  coast  of  South  America,  and  the  West  Indies. 

(G)  The  Pacifie  route,  connecting  North  America  with  Asia, 
over  which  an  extensive  trade  with  China,  Japan  and  the  Phil- 
hppines  is  carried  on. 

(H)  From  the  North  American  Pacific  coast  to  New  Zealand, 
Australia  and  the  South  Sea  islands. 

(I)  The  Pamama  ComH  route,  the  development  of  the  use  of 
which  promises  to  be  rapid  and  extensive  with  the  relief  from 
the  abnormal  conditions  created  by  the  war.  European  trade 
with  the  west  coast  of  North  and  South  America,  and  America's 
Atlantic  and  Gulf  trade  with  the  Pacific  coast  and  the  Orient,  can 
he  cjqpctod  to  move  to  an  increasing  degree  by  way  of  Ptaama. 

History  of  American 
Merchant  Marine 

Briefly,  we  may  trace  the  growth  of  our  shipping  back  to 
the  cokmial  period  when  Massachusetts  owned  about  one  sea- 
going vessel  for  every  hundred  inhabitants. 

During  the  Revolution,  the  colonies  unable  to  build  a  navy, 
through  the  lack  of  funds,  commissioned  hundreds  of  priva- 
teers, which,  manned  by  able  seamen,  furnished  an  enviable 
chapter  to  Amerkan  naval  history.  After  the  war,  however, 
the  merchant  marine  had  a  difficult  struggle  to  keep  alive. 
The  situation  became  acute  when  a  British  order-in-council 
prohibited  the  purchase  of  American-made  vessels.  This 
order  was  issued  in  spite  of  the  fact  that  America  at  that 
thne  could  build  ships  at  less  cost  than  in  England. 

In  1789,  the  Constitutional  Government  immediately  came 
to  the  rescue  of  the  merchant  marine.  Congress  passed  a  law 
providing  for  a  reduction  of  10  percent  In  the  duties  laid  upon 
imports  when  carried  by  American  sh^  Another  measure 
laid  a  tax  of  6  cents  on  American-built  ships  if  owned  by 
Americans,  30  cents  if  owned  by  foreigners,  and  50  cents  i£ 
foreign-built  and  foreign-owned. 


OUR  MERCHANT  MARINE  889 

This  legislation  had  an  almost  immediate  effect.  The  regis- 
tered tonnage  in  the  foreign  trade  increased  from  123,893  tons 
in  1789  to  MBfiU  in  1790,  and  m  1794  the  registered  tonnage 
reached  a  total  of  438,  863  tons.  The  effect  on  the  transpor- 
tation of  imports  in  American  vessels  was  also  encouraging. 
In  1789  the  percentage  of  imports  carried  in  American  bot- 
toms was  17.5  percent,  41  in  1790,  68  in  1791,  67  in  1792,  82  in 
1793  and  91  in  1794. 

Our  merchant  marine  experienced  a  set-hack  again  at  the 
time  of  the  French  Revolution  in  1800,  when  those  in  power 
in  France  had  difficulties  with  the  Administration  in-  Wash- 
ington. As  a  result  French  privateers  broke  loose  in  the 
West  Indies,  and  began  a  bitter  campaign  against  American 
vessels.  For  self  protection,  the  Government  established  a 
navy  department,  and  naval  warfare  immediately  began  on 
French  ships  that  attacked  our  commerce.  A  series  of  Amer- 
ican victories  on  the  high  seas  aoon  convinced  the  French 
Government  that  it  was  a  better  policy  to  leave  American 
shipping  alone« 

During  the  3rears  preceding  the  War  of  1812,  there  was  no 
letup  on  attacks  on  American  shipping.  France  and  England 
established  blockades  aimed  to  injure  American  commerce.  A 
British  order-in-council  f<Mrbade  neutrals  to  trade  with  France, 
and  France  retaliated  with  orders  of  her  own,  ail  of  which 
were  aimed  to  cripple  our  growing  merchant  marine.  Eng- 
land's claim  to  the  right  of  impresment  caused  the  seizure 
and  confiscation  of  millions  of  dollars  worth  of  American  ves- 
sels and  cargoes,  and  thousands  of  captured  American  seamen 
were  forced  to  serve  under  the  British  flag  against  their  wilL 

As  a  measure  of  self  protection,  the  famous  Embargo  Act 
of  December  22,  1807,  was  enacted.  Instead  of  protecting  and 
saving  American  commerce  the  Embargo,  after  being  in  force 
for  15  months,  cost  the  United  States  more  tiian  $100,000,000, 
and  neariy  wiped  out  of  existence  the  shipping  and  shipbuild- 
ing industries.  Then  the  war  came,  and  another  series  of 
brilliant  victories  by  American  armed  merchant-men  over 
British  warships  was  recorded. 


/ 


840  EXPORTING  TO  THE  WORLD 

American  Shipping 
Thrived  in  1810 

It  is  interesting  to  note  that  the  tonnage  of  American  ves- 
-  aels  engaged  in  foreign  trade  in  1810—980,000  tons— -was  100,- 

000  tons  greater  than  the  paper  figures  for  1910,  and  not  more 
than  two-thirds  of  the  total  at  this  later  date  was  engaged  in 
foreign  commerce* 

The  size  of  ocir  merchant  marine  at  this  period  enconraged 
Congress  to  the  belief  that  it  could  he  farther  developed  by 
letting  the  bars  down  on  some  of  the  restrictions  placed  on 
the  importation  of  merchandise  to  this  country.  Consequent- 
ly, in  1815,  Congress  passed  the  Reciprocity  Act  removing 
tonnage  and  preferential  duties  laid  upon  imports,  bnt  it  had 
little  effect  at  the  time  as  the  nations  that  ordinarily  would 
have  taken  advantage  of  this  Act,  were  too  busy  developing 
their  own  business  at  home.  However,  when  the  Act  was 
renewed  in  1828,  there  was  a  general  acceptance,  as 
Europe  was  now  in  a  better  positicm  to  pay  attention  to  its 
foreign  ^ymmerce.  Competition  became  very  keen,  and  not 
to  the  advantage  of  American  shipping. 

The  Era  of  Steam 
NiwigaHoK  Arrive 

In  1819,  the  Savannah,  the  first  steam  vessel  to  cioss  the 
Atlantic,  inaugurated  the  era  of  the  steamship,  which  has 

played  such  an  important  part  in  the  history  and  development 
of  commerce  in  these  modern  days.  From  that  date  the  de- 
velopment of  the  steamer  was  rapids  Lines  were  established 
in  all  parts  of  Europe;  steam  vesseb  plyed  along  the  Atlantic 
coast  of  the  United  States;  lines  were  inaugurated  to  the 
West  Indies.  It  was  not  until  1836,  however,  that  the  present 
great  trans-Atlantic  service  had  its  beginning.  In  that  year, 
Junius  Smith,  an  American  organized  the  British  and  Amer- 
ican Steamship  Navigation  Company,  and  chartered  a  700-ton 
steamer,  the  Sirius,  for  the  first  trip  across  the  Atlantic.  Then 
the  Great  Western  Railroad,  in  the  same  year,  sent  the  Great 
Western  (1,320  tons)  across  the  Atlantic  on  her  initial  trip. 

But  steam  navigation  did  not  pay  in  those  days,  so  Samuel 
Cunaidy  of  Halifax,  amcesved  the  idea  of  obtaining  a  subsidy 


OUR  MERCHANT  MARINE  Ul 


of  $425,000  annually  from  the  British  government,  and  founded 
the  Cunard  Line  which  is  operating  to  this  day.  The  first 
ship  of  the  line  crossed  in  1840.  The  subsidy  was  later  in- 
creased to  $860,000  and  the  western  terminus  was  moved  from 
Boston  to  New  York,  where  it  is  still  located.  The  British 
Government,  recognizing  almost  instantly  the  value  of  aiding 
and  cooperating  with  the  shipping  industry,  extended  aid  to 
other  lines  running  to  the  West  Indies,  South  America,  Aus- 
tralia and  India. 

In  the  meantime,  the  United  States  remained  idle  in  the 
matter  of  assisting  American  shipping.  The  most  encourag- 
ing step  taken  at  this  time  was  the  establishment  of  a  mail 
subsidy  in  1845,  resulting  in  the  starting  of  two  lines  to  Eur- 
ope, on  one  of  which  was  opmted  the  finest  steamer  on  the 
trans-Atlantic  route.  About  the  same  time  contracts  were 
made  with  other  companies  operating  lines  to  the  West  Indies 
and  other  points  north  of  the  Panama  Canal.  In  1855,  Con- 
gress repealed  the  mail  subsidy,  and  the  American  merchant 
marine  again  suffered  a  8et4>ack.  The  trans-Atlantic  lines 
were  suspended  and  their  business  was  taken  over  by  British 
interests. 

The  final  blow  to  American  shipping  was  given  during  the 
Civil  War,  when  foreign  commerce  decreased,  insurance  rates 
went  up,  wages  soared,  firemen  and  seamen  went  into  the 
navy,  and  American  capital  was  used  to  develop  enterprises 
of  a  more  assuring  return.  In  the  meantime,  European  na- 
tions began  a  keen  competition  in  the  carrying  trade,  with 
Great  Britain  in  the  lead.  The  leading  maritime  nations  of 
that  time  were  Ghreat  Britain,  France,  Germany,  Belgium, 
Holland,  Austria,  Italy,  Spain,  Norway  and  Sweden.  Regis- 
tered tonnage  in  the  United  States  steadily  decreased  until 
1898,  when  it  was  726,213  tons— the.  lowest  for  nearly  100 
years* 

Again  Shipping 
Industry  Js  Revive'^ 

In  1910,  it  rose  to  782,617  tons.  The  Panama  Ax^  of  1912 

providing  for  the  registry  of  foreign-built  vessels  not  more 
than  five  years  old,  and  the  Shipping  Act  of  1914  removing 
this  age  limit  caused  a  gain  of  over  600,000  tons  to  American 
shipping,  and  when  the  War  broke  out  ^nerkan  shipping 


m  EXPORTING  TO  THE  WORLD 

once  more  had  a  splendid  opportunity  of  leading  the  world. 
In  1915,  there  was  passed  the  Seaman's  bill  calling  for  in- 
creased wages  and  other  conditions  on  American  vessels. 
American  shipowners,  prottxlmg,  declared  that  thejr  conld 
not  sncceasltilly  compete  against  foreign  interests  tinder  these 
conditions,  and  consequently  a  number  of  companies  sold  out 
to  foreign  concerns. 

However,  the  demands  made  npon  shipping  by  the  War 
y ere  too  great  to  consider  obstacles,  and  from  this  date  rapid 
I  strides  were  made  in  American  shipping. 

In  1919  a  new  era  in  the  history  of  the  American  merchant 
marine  was  inaugurated  with  the  creation  of  the  Shipping 
Board  with  wide  powers  to  operate  a  corporation  to  build,  buy 
or  lease  vessels  or  merchant  ships.  In  the  language  of  the 
Third  Annual  Report  of  the  United  States  Shipping  Board  the 
functions  of  that  organization  are  described  as  follows: 

**The  United  States  Shipping  Board  served  as  the  agency 
through  which  the  problems  of  shipping  control  were  hand- 
led, and  the  war  powers  of  the  United  States  in  the  field  of 
transportation  were  administored.  It  regulated  all  the  ship- 
ping of  the  country;  repaired  the  seized  German  ships;  re- 
cruited and  trained  officers  and  seamen  for  merchant  vessels; 
supervised  the  chartering  of  all  ships  (foreign  and  domestic) 
from  American  ports;  developed  port  facilities;  handled  large 
problems  of  labor  control;  and  operated,  directly  or  through 
private  shipping  agencies,  a  vast  merchant  marine." 

The  Shipping  Board's  activities  in  the  movement  of  troops 
are  described  as  follows: 

"One  of  the  accomj^ishments  of  America's  participation 
in  the  Worid  War  was  the  movement  of  8,000,000  troops 
overseas,  with  the  elaborate  supply  of  munitions,  material, 
and  food  necessary  for  maintaining  these  troops  at  a  -high 
point  of  efficiency. 

"In  all  its  efforts  for  the  acquisition  and  the  creation  of 
new  tonni^,  the  Board's  uppermost  thought  was  needs  of 
the  Army.  German  vessels  were  taken  over  by  the  Board, 
and  the  huge  task  of  repairing  and  putting  them  into  Army 
service  was  quickly  done  ;  Dutch  ships  in  our  ports  were 
acquired;  'many  neutral  vessels  were  chartered  from  Norway, 
Sweden,  and  Denmark;  Japanese  steamers  were  acquired 
in  considerable  number  by  purchase;  all  American  steamers 


Before  the  Civil  War  America  led  the  maritime  nations  of  the  world. 
American  clipper  ships  outsailed  all  others.  The  quantity  and  quality 
of  the  output  of  American  shipyards  was  unexcelled.  Before  the  Great 
War^  however,  American  sea-going  tonnage  represented  barely  two  per 

cent,  of  the  world's  totaL 


INTENTIONAL  SECOND  EXPOSURE 


m  EXPORTING  TO  THE  WORLD 

once  more  had  a  splendid  opportunity  of  leading  the  world. 
In  1915,  there  was  passed  the  Seaman's  bill  calling  for  in- 
creased wages  and  other  conditions  on  American  vessels. 
American  shipowners,  protesting,  declared  that  they  could 
not  successfully  compete  against  foreign  interests  under  these 
conditions,  and  consequently  a  number  of  companies  sold  out 
to  foreign  concerns. 

However,  the  demands  made  upon  shipping  by  the  War 
were  too  great  to  consider  obstacles,  and  from  this  date  rapid 
'strides  were  made  in  American  shipping. 

In  1916  a  new  era  in  the  history  of  the  American  merchant 
marine  was  inaugurated  with  the  creation  of  the  Shipping 
Board  with  wide  powers  to  operate  a  corporation  to  build,  buy 
or  lease  vessels  or  merchant  ships.  In  the  language  of  the 
Third  Annual  Report  of  the  United  States  Shipping  Board  the 
functions  of  that  organization  are  described  as  follows: 

"The  United  States  Shipping  Board  served  as  the  agency 
through  which  the  problems  of  shipping  control  were  hand- 
led, and  the  war  powers  of  the  United  States  in  the  field  of 
transportation  were  administered.  It  regulated  all  the  ship- 
ping of  the  country;  repaired  the  seized  German  ships;  re- 
cruited and  trained  officers  and  seamen  for  merchant  vessels ; 
supervised  the  chartering  of  all  ships  (foreign  and  domestic) 
from  American  ports ;  developed  port  f adlities ;  handled  lai^ 
problems  of  labor  control;  and  operated,  directly  or  through 
private  shipping  agencies,  a  vast  merchant  marine." 

The  Shipping  Board's  activities  in  the  movement  of  troops 
are  described  as  follows: 

"One  of  the  accomplishments  of  America's  participation 
in  the  Worid  War  was  the  movement  of  2,000,000  troops 
overseas,  with  the  elaborate  supply  of  munitions,  material, 
and  food  necessary  for  maintaining  these  troops  at  a  -high 
point  of  efficiency. 

"In  all  its  efforts  for  the  acquisition  and  the  creation  of 
new  tonnage,  the  Board's  uppermost  thought  was  needs  of 
the  Army.  German  vessels  were  taken  over  by  the  Board, 
and  the  huge  task  of  repairing  and  putting  them  into  Army 
service  was  quickly  done;  Dutch  ships  in  our  ports  were 
acquired;  many  neutral  vessels  were  chartered  from  Norway, 
Sweden,  and  Denmark;  Japanese  steamers  were  acquired 
in  considerable  number  by  purchase;  all  American  steamers 


Before  the  Civil  War  America  led  the  maritime  nations  of  the  world. 
American  cHpper  ships  outsailed  all  others.  The  quantity  and  quality 
of  the  output  of  American  shipyards  was  unexcelled.  Before  the  Great 
War,  however,  American  sea-going:  tonnagre  represented  barely  two  per 

cent,  of  the  world's  totaL 


OUR  MERCHANT  MARINE 


available  for  the  Nation's  use  were  requisitioned;  Lake  ships 
were  reconstructed  and  brought  to  the  seaboard,  and  a  very 
extensive  shipbuilding  program  was  launched. 

*'0n  November  1,  1918,  the  total  tonnage  in  active  service 
controlled  by  the  United  States  Shipping  Board,  amounted  to 
1,196  vessels  of  6,540,205  deadweight  tons.  This  included 
requisitioned  tonnage,  time  chartered,  neutral,  and  seized  Ger- 
man vessels.  Of  this  total,  598  vessels  of  4,269,838  dead- 
weight tonnage  were  in  the  direct  service  of  the  Army  and 
Navy.  These  carried  troops  and  supplies  to  European  ports. 
This  was  the  situation  at  the  signing  of  the  armistice  on  No- 
vember 11,  1918." 

The  Shipping  Board's  authority  to  even  restrict  the  trans- 
fer of  American  vessels  to  foreign  registery  without  permis- 
sion is  contained  in  Section  9  of  the  Shipping  Act  of  1916, 
providing  that  when  (he  United  States  is  at  war  or  during 
any  national  emergency,  the  existence  of  which  is  declared 
by  proclamation  of  the  President,  it  shall  be  unlawful,  without 
first  obtaining  the  approval  of  the  Board,  to  sell,  mortgage, 
or  lease  any  vessel  documented  under  the  laws  of  the  United 
States  or  to  transfer  any  such  vessel  to  a  foreign  r^istry  or 
flag.  On  June  4,  1918,  the  measure  was  made  more  difficult 
by  entirely  withholding  permission  to  American  vessels  of 
more  than  100  tons  gross  registry  to  pass  to  any  foreign  flag. 

On  December  12,  1918,  it  was  decided  to  authorize  the  sale 
of  wooden  vessels  .then  under  construction  in  American  ship- 
yards to  foreign-owned  American  corporations  and  to  for- 
dgners  without  restriction,  excepting  to  enemy  ownership, 
and  the  transfer  of  all  such  documented  tonnage  to  foreign- 
owned  American  corporations,  providing  such  transfers  w^ere 
not  inconsistent  with  national  interests;  also  the  sale  of  aU 
documented  wooden  vessels  to  foreigners  with  the  privily  to 
transfer  to  buyer's  flag  in  exceptional  cases  only,  after  care- 
fully considering  each  case  on  its  merits.    This  policy  was 
modified  gradually  until  wooden  vessels  were  permitted  to 
pass  to  foreign  registeries  unless  there  appeared  to  be  some 
good  reason  why  the  transfers  should  not  be  approved. 

The  Board's  policy  toward  the  disposal  of  American  iron 
and  steel  tonnage  to  foreign  flags  was  somewhat  different.  It 
says  in  the  annual  report: 

"This  marked  relaxation  of  poUcy  did  not  apply  to  the 


Z4A  EXPORTING  TO  THE  WORLD 

transfer  of  American  iron  or  steel  tonnage  to  foreig^n  flag^, 
as  to  uncertainty  of  the  international  situation  generally,  the 
duty  of  the  United  States  to  provide  proper  transportation 
facilities  lor  the  retara  ci  American  soldiers  from  overseas, 
and  its  moral  obligation  to  carry  food  to  the  starving  peoples 
of  Europe  made  it  manifestly  unwise  to  part  with  the  control 
of  such  desirable  shipping.** 

The  Shipping  Board  was  authorized  on  July  IS,  1918,  by 
an  amendment  to  the  Shipping  Act,  to  assume  control  over 
construction  for  foreign  account.  The  amendment  provided 
that  when  the  United  States  is  at  war  or  when  a  national 
^emergency  has  been  proclaimed  by  the  President,  the  con- 
struction or  transfer  of  a  vessel  to  foreign  register  was  pro- 
hibited unless  under  approval  oi  the  Shipping  Board.  This 
amendment  was  rigidly  enforced  until  the  signing  of  the  ar- 
mistice, but  on  November  11,  1918,  the  Board  lifted  this  ban 
and  permitted  unlimited  construction  of  wooden  tonnage  for 
American  or  foreign  account  and  steel  tonnage  for  American 
account.  On  June  14,  1919,  all  restrictions  were  lifted  when 
Chairman  Hurley  advised  all  8hip3rard8  in  the  United  States 
that  construction  of  steel  ships  for  foreign  account  would  be 
permitted  upon  presentation  of  all  contracts  to  the  Board. 

Future  of  Ameriem 

As  to  a  bright  future  for  the  American  merchant  marine 
there  seems  to  be  no  doubt.  The  entire  country  is  united  in 
its  opinion  that  there  must  be  an  American-owned  merchant 
marine  to  carry  the  increased  tonnage  of  merchandise,  to 
bbze  new  water  trails  to  all  parts  of  the  worid,  and  to  re- 
awaken the  enthusiasm  of  the  old  days  for  a  commercial  fleet 
flying  the  American  flag.  At  this  writing  as  the  United  States 
Shipping  Board  has  discontinued  its  shipbuilding  activities, 
and  has  cancelled  its  contracts  with  private  shipbuilding 
yards,  an  encouraging  feature  of  our  shipbuilding  industry 
is  seen  in  the  renewed  vigor  with  which  these  private  yards 
have  gone  after  business.  At  the  end  of  the  year  1919,  a 
most  encouraging  report  of  the  activities  of  private  shipyards 
was  issued  by  the  Atlantic  Coast  Shipbuilders'  Association 
which  said  in  part: 


OUR  MERCHANT  MARINE  a4l» 


^American  shipyards,  instead  of  falling  back  as  govern- 
ment contracts  are  suspended,  cancelled  or  completed,  are 
lofging  steadily  ahead.  Work  for  private  accounts  is  replac- 
ing diat  which  was  being  done  for  the  Shipping  Board  and 
although  a  number  of  orders  for  American  industries  have 
been  completed  or  withdrawn,  the  shipyards  today  are  build- 
ing over  a  quarter  of  a  million  gross  tons  more  than  they 
were  a  month  ago  and  nearly  half  a  million  tons  more  than 
in  October.  The  total  now  under  construction,  exclusive  of  all 
government  work,  is  805,000  gross  tons,  the  equivalent  of 
more  than  1,800,000  deadweight  tons  of  sea-going  vessels. 

"This  steady  advance  is  only  one  of  the  encouraging  fea- 
tures in  the  development  of  the  American  shipbuilding  in- 
dustry. The  shipbuilders,  themselves,  continue  to  show  faith 
in  the  future  of  the  American  merchant  marine  by  taking  over 
contracts  given  up  by  the  Shipping  Board  and  will  com- 
plete the  partially  constructed  vessels  in  the  expectation  of 
finding  a  market  for  them.  Omditions  indicate  that  they 
are  justified  in  the  belief  that  there  will  be  a  oontinticd  de- 
mand for  American  tonnage. 

America  Capable  of 
QuimiUy  ProducHoa 

••As  matters  stand  today,  the  United  States  is  the  only 

nation  in  the  world  in  a  position  to  supply  merchant  vessels 
quickly  and  in  quantity.  The  British  shipyards  are  tied  up 
with  orders  ior  two  years  to  come.  Other  foreign  countries 
are  unable  to  supply  the  home  demand  and  are  seeking  ton%« 
nage  elsewhere.  There  is  nowhere  to  place  orders  for  prompt 
delivery  but  in  the  United  States,  and  only  the  unfavorable 
position  of  the  exchange  and  in  the  insistence  upon  long- 
temf  credits  are  keeping  back  a  flood  of  foreign  orders. 

**The  factor  of  speedy  delivery  is  a  powerful  asset  for 
American  shipyards.  Leading  British  shipbuilders  who  have 
visited  the  principal  plants  in  the  United  States  frankly  admit 
that  the  output  here  is  at  the  rate  of  two  to  three  times  that 
of  the  Britii^  yards.  This  means  that,  shipway  for  shipway, 
this  country  can  produce  double  to  treble  the  tonnage  that 
Great  Britain  can.   Furthermore,  with  the  great  rapidity  of 


346  EXPORTING  TO  THE  WORLD 


tnniovery  the  American  shipbtiildiiig  industry  is  getting^  so 
much  more  service  out  of  its  i>lants  that  this  factor  will  result 
in  a  marked  lessening  of  production  costs  that  will  enable 
the  United  States  to  meet  England's  prices^  which  are  at 
present  lower  because  of  cheaper  labor. 

*That  speed  of  production,  due  largely  to  the  employment 
of  more  modern  methods  and  the  greater  use  of  labor-saving 
devices  than  in  Britain,  has  not  lessened  the  quality  of  Ameri* 
can-built  ships,  is  plainly  manifest  Smce  the  Armistice, 
Lloyd's  Register  of  Shipping,  a  British  institution,  has  super- 
vised the  complete  construction  of  nearly  600  steel  steamers 
«  an  United  States  yards  and  has  rated  every  one  of  them  100- 
Al,  the  highest  class  given. 

**The  showing  of  the  American  yards  is  the  more  remark* 
able  in  that  of  152  ships  now  being  constructed  for  private 
account  only  one  is  on  foreign  order.  At  present,  therefofe, 
American  industry  fs  providing  practically  100  per  cent  of 
the  work  being  done,  in  spite  of  the  fact  that  the  Shipping 
Board  is  trying  to  dispose  of  hundreds  ol  compleled  ships 
cm  liberal  credit  terms." 

Government  ActknUes 

in  Shipping  Industry 

Thus,  we  have  seen  how  American  shipping  is  progressing 
by  private  enterprise,  while  at  the  same  time  there  seems 
to  be  much  uncertamty  as  to  what  the  United  States  Ship- 
ignskg  Board  will  do  with  the  immense  tonnage  it  has  under 
its  control.  When  the  war  ended  the  Board  returned  certain 
ships  to  their  original  owners;  allocated  others  to  different 
routes  to  be  operated  by  private  interests  under  certain  co»-> 
ditions  prescribed  by  the  Board,  and  at  the  present  writing 
an  outright  sale  to  American  concerns,  and  to  foreign  inter- 
ests under  certain  restrictions  is  in  progress.  What  the 
future  activities  of  the  Shipping  Board  shall  be  rests  with 
Gnigfess.  Measures  are  now  under  discussion  in  Wash- 
ington tor  the  preservation  in  some  form  or  other  of  a  vig- 
orous government  shipping  policy.  There  appears  to  be  con- 
siderable opposition  to  a  government-owned  and  operated 
merchant  marine.   But  while  there  is  a  wide  divergence  of 


OUR  MERCHANT  MARINE 


347 


opinion  in  this  regard,  nevertheless,  in  justice  to  the  G>n- 
gress,  it  must  be  said  that  there  is  an  evident  determination 
in  that  body  to  develop  our  opportunities  on  the  sea  to  the 
utmost  in  the  future.  It  seems  evident,  therefore,  that  the 
bulk  of  our  commerce  will  probably  be  carried  in  ships  priv- 
ately owned  and  operated  as  opposed  to  government  owner- 
ship. The  only  thing  that  private  interests  ask  of  the 
government  is  the  removal  of  certain  restrictions  that  prevent 
them  from  successfully  competing  with  foreign  countries,  and 
the  enactment  of  legislation  that  will  not  only  encourage  the 
industry  but  to  help  it  phu^e  itself  on  a  permanent  basis. 

As  a  vmter  recently  said :  "It  is  sreneralJy  recognized  that  the 
permanent  development  of  our  merchant  marine  can  be  best 
accomplished  through  private  ownership  and  operatkm.  Com- 
petition in  tiie  field  of  over-seas  trade,  in  normal  times  on  the 
economic  basis  of  profit,  from  services  rendered,  demands  a 
measure  of  individual  initiative,  freedom  of  judgment  and 
breadth  of  experience  that  cannot  be  had  under  government 
control.  It  would  seem  clear  that  the  only  basis  on  which 
new  capital  may  be  made  avaikble  for  the  development  our 
merchant  marine  is  the  prospect  of  earning  reasonable  returns 
on  the  investment.  Before  a  broad  field  of  investment  can 
be  made  available  to  the  shipping  industry,  however,  the 
^l  iality  and  security  of  ship  mortgages,  which  are  now  sub- 
ject to  a  variety  of  prior  liens,  must  be  improved  and  stand- 
ardized. Furthermore,  to  assure  American  shipping  a  more 
neariy  equal  basis  of  competitbn  with  foreign  shipping,  some 
modification  of  restrictions  imposed  by  our  navigation  laws, 
which  tend  to  increase  unduly  the  relative  cost  of  operation, 
may  well  be  considered.'' 

With  government  assistance  and  cooperation,  a  privately 
owned  and  operated  American  merchant  marine  seems  to  be 
the  logical  poHcy  at  the  present  time.  With  changing  con- 
ditions the  worid  over,  this  is  a  time  for  individual  initiative 
and  enterprise  and  in  which  a  cumbersome  Government 
organization  lacking  the  qualities  requured  in  such  efforts 
as  the  present  time  demands,  would  be  out  of  place. 


m  EXPORTING  TO  THE  WORLD 


How  Vessels 

are  Measured 

The  methods  of  measuriiig  the  capacity  of  a  ship  are  con- 
fusing to  many.  In  concluding  this  chapter  it  seems 
appropriate  to  give  a  brief  explanation  of  these  methods. 

Ships  are  measured  by  three  different  methods. 

(a)  Displacement  tonnage. 

(b)  Dead-weight  tonnage. 
(c>  Raster  tonnage. 

Displacement  tonnage :  The  weight  of  the  volume  of  water 
which  the  ship  will  displace  when  fully  loaded  with  crew, 
coal  for  steaming  purposes,  supplies,  etc,  on  board.  This 
method  is  in  use  by  the  navies  of  the  world,  and  assures 
accuracy  and  uniformity. 

Dead-weight  tannage:  The  actual  weight  of  the  cargo 
which  a  merchant  ship  can  transport.  This  method  is  adap- 
ted only  to  vessels  that  carry  homogeneous  bulk  cargoes, 
and  not  to  passenger  vessels  or  vessels  carrying  miscdla- 
neous  cargoes. 

Register  tonnage:  Expressed  in  terms  of  gross  tonnage 
and  net  tonnage.  Gross  register  tonnage  represents  the 
entire  cubical  space  of  a  merchant  vessel.  It  is  obtamed  by 
dividing  the  total  interior  capacity  of  a  ship  by  100.  Net 
register  tonnage  represents  the  remainder  of  the  tonnage 
after  the  sum  of  exempted  spaces  is  deducted  from  the  gross 
tonnage.  Exempted  space  includes  officers'  and  crew 
quarters,  engines,  boilers,  and  machinery,  etc.  The  net  ton- 
nage may  be  said  to  be  the  portion  of  the  ship  which  pro- 
duces income  by  its  capacity  to  carry  cargo  and  passengers. 


CHAPTER  XXI 


HOW  GOVERNMENT  HELPS  EXPORTER 

The  object  of  the  Bureau  of  Foreign  and  Domestic  Commerce 
of  the  United  States  Department  of  Commerce  is  to  assist  Amer- 
ican manufacturers  and  exporters  in  the  extension  of  their  for- 
eign trade.  It  has  been  said  by  American  merchants  that  the 
British  and  the  German  governments  do  more  for  their  manu- 
facturers and  exporters  in  the  matter  of  co-operating  to  obtain 
foreign  busmess  than  any  other  nations  m  the  world;  it  is  in- 
teresting to  note,  however,  that  the  same  complaints  have  been 
made  by  German  and  British  interests  against  their  own  govern- 
ments in  which  the  United  States  has  been  held  up  as  an 
to  the  governing  authorities. 

There  is  no  question  diat  the  United  States  government  has 
made  a  commendable  start  in  extending  its  activities  to  foreign 
countries  where  competent  officials  may  gather  data  and  informa- 
tion for  American  industry  that  is  beginning  to  realize  more  and 
more  than  ever  before  the  necessity  of  extending  operations  to 
all  comers  of  the  globe.  The  service  that  the  government 
offers  is  extensive.  It  compiles  reports  from  all  sections  of  the 
world.  It  sends  out  special  trade  commissioners  to  obtam  specific 
information  regarding  commerdal  conditions  and  opportuni- 
ties for  American  merchants.  It  maintains  commercial  at- 
taches in  the  principal  trade  centers  of  the  world.  .  Through 
the  Qmsular  service  it  is  able  to  supply  American  manufac- 
turers with  constant  reports  of  commercial  conditions  and 
other  important  information  for  the  use  of  American  shippers. 

Perhaps,  the  most  important  service  rendered  by  the  Bureau 
of  Foreign  and  Domestic  Commerce  is  that  through  Commerce 
Reports,  a  small  daily  bulletin  compiled  from  reports  sent  in  from 
all  sections  of  the  world  by  consular  agents  and  special  investi- 
gators. Names  and  addresses  of  foreign  concerns  desiring  to 
make  connections  witii  American  manufacturers  and  exporters 
may  be  obtained  through  Commerce  Reports.   This  buUetin  is 


m  EXPORTING  TO  TH£  WORLD 


very  complete  in  the  infonnatiofi  that  it  gives  to  those  interested. 

The  latest  news  regarding  the  developments  in  industry  and  for- 
eign trade  may  be  found  here.  Many  articles  appearing  in  this 
bulletin  are  general  in  character,  bnt  <^ten  valuable  con- 
tributions dealing  with  specific  lines  of  goods  may  be  found 
therein.  ' 

Tht  bureau  also  issues  annual  reports  compiled  by  consular 
officers,  which  are  supplements  to  Commerce  Reports  and 
which  contain  reviews  of  the  trade  and  industry  of  the  con- 
sular districts  during  the  year.  Manufacturers  and  exporters 
who  subscribe  to  tiiis  branch  of  the  government  service  value 
these  supplements  highly  as  they  show  the  general  commer- 
cial conditions  as  well  as  the  statistics  of  imports  and  exports 
of  the  particular  articles  that  enter  into  the  foreign  commerce 
of  the  districts  discussed.  These  statistics  often  serve  as  a 
basis  for  American  shippers  in  arriving  at  a  decision  to  enter 
a  certain  field  with  a  certain  line  of  merchandise. 

iUparis  of  Specified 
ProdMCis  Vah§Me 

A  very  valuable  service  is  rendered  in  the  distribution  of 
monographs  on  foreign  markets  for  sped  tied  products  showing 
tiie  trade  conditions,  the  extent  of  foreign  competition,  and  the 
methods  of  entering  the  market  These  reports  are  prepared  by 
experts  in  their  fine  who  devote  months  of  study  to  the  subject  in 
hand.  Upon  publication  these  reports  are  placed  on  sale  at 
nominal  cost  and  are  very  much  sought  by  those  interested  in 
the  specific  lines  in  which  they  deal.  An  idea  of  the  subject  cov^ 
ered  in  these  reports  may  be  obtained  by  the  following  titles  of 
a  number  of  monograms  now  ready  for  distribution :  "Cotton 
Goods  in  Latin-America,"  "Shoe  and  Leather  Trade  in  the  United 
KtQgdonii"  "Shoe  and  Leather  Trade  in  Germany,"  "Cottm 
Goods  in  Russia,"  ''Philippine  Market  for  American  Lumber," 
'"Commercial  Organizatikms  in  Switzerland,"  "Central  America 
as  an  Export  Field,"  etc. 

Concerning  the  methods  of  obtaining  trade  information  a  bul- 
letin of  the  bureau  has  this  to  say :  "The  greater  part  of  the  ift- 
formation  is  obtained  from  three  sources:  the  Consular  Service^ 
wliidi  indndes  more  tiian  300  consuls  and  many  consular  agcnti; 


HOW  GOVERNMENT  HELPS  EXPORTER  861 


the  Trade  Commissioners,  who  study  special  industries  in  spec- 
ific countries;  and  the  Commercial  Attaches,  who  are  stationed 
in  the  principal  countries  and  give  all  their  time  to  commercial 
investigations.  In  addition,  the  statistics  of  American  trade  with 
foreign  countries  are  collected  at  American  customhouses  in  co- 
operation with  the  Treasury  Department. 

"Information  from  all  these  sources  is  forwarded  to  Wash- 
ington and  is  distributed  chiefly  through  the  Bureau's  publica- 
tions, which  may  be  classified  as  r«!gular,  or  periodical,  publi- 
cations and  as  special  bulletins  or  monographs.  These  are  for 
sale  by  the  District  and  Cooperative  Offices  of  the  Bureau  and 
by  the  Superintendent  of  Documents,  Government  Printing 
Office,  Washington,  D.  C" 

Regular  PfMeaikm 
of  the  Bureau 

The  regular  publications  of  the  Bureau  are  the  Commerce 
Reports  which  are  mailed  daily;  the  quarterly  volume  with  index 
aad  the  quarteriy  index. 

The  Moo^y  Summaiy  of  Commerce  and  Finance  is  sold  lor 
m  nominal  yearly  subscription. 

The  Quarterly  statement  contains  statistics  of  imported  mer- 
chandise entered  for  consumption  and  is  sold  for  a  nominal 
yearly  subscription. 

The  Statistical  Abstract  is  an  annual  publication. 

Gmuneroe  and  Navigatioii  is  an  annaal  puMication  containing 
such  information  as  imports  of  merchandise  by  articles  and 
countries ;  exports  of  domestic  merchandise  by  articles  and  coun- 
tries ;  imports  entered  for  consumption,  etc. 

The  Chief  of  the  Bureau  of  Foreign  and  Domestic  Commerce 
issues  a  valuable  annual  report 

Among  the  free  publicaticms  is  one  called  Exports  of  Domestic 
breadstnffs,  cottonseed  oil,  etc.,  a  mondily  bulletin  as  well  as  a 
monthly  report  of  total  values  of  imports  and  exports. 

Special  Bulletins 
of  the  Bureau 

The  spedd  bulletins  of  die  Burean  are  ffivided  into  five 

groups :  (a)  Special  Agent  Series,  which  comprise  monographs 
on  special  industries  and  special  phases  of  commerce,  prepared 


m  EXPORTING  TO  THE  WORLD 


by  the  commercial  agents  or  trade  commissioners ;  (b)  Special 
Consular  Reports ;  (c)  Miscellaneous  Series;  (d)  Foreign  Tar- 
iff Series;  and  (e)  Indttstnal  Standards. 

The  last  named  is  a  new  series  recently  undertaken  by  tlie 
Bnreati.  It  consists  of  standard  specifications  for  industrial 
materials  that  have  been  prepared  by  the  Government  and  by 
technical  societies  and  other  organizations,  and  accurate  and 
leliable  translations  of  them  into  foreign  languages.  The  pur- 
pose of  these  puUicatiotts  is  to  facilitate  commerce  between  the 
United  States  and  forngn  countries  by  translating  and  making 
available  standard  specifications  for  material  of  various  kinds, 
commercially  acceptable  and  representing  practice.  Sixty-two 
standard  specifications  of  the  American  Society  for  Testing 
Materials  have  been  translated  into  Spanish  and  are  printed  with 
tiie  Snanish  and  Enriish  texts  on  fechisr  nasKs. 

Bureau  Serves  as 
Information  Depot 

Additional  inf onnatioo  of  iralue  to  die  American  manufacturer 
or  exporter  on  subjects  of  general  importance  may  be  obtained 

by  applying  to  the  branches  of  the  Bureau  located  in  some  of 
the  principal  cities  of  the  United  States.  With  respect  to  this 
service  a  recent  pamphlet  of  the  Bureau  has  this  to  say: 

"By  applying  to  the  Bureau  you  can  get  Jati^L^tesJ^loGDa--. 
in  foreign  countries  which,  in  conjunction  with  rates, 
win  enable  you  to  detem^  the  price  at  which  your  goods  can 
be  sold.  It  is  particularly  important  to  know  this  if  you  are  com- 
peting with  a  native  product,  or  if  you  are  shipping  to  countries 
which  give  preferential  rates  of  duties  to  the  goods  of  other  coun- 
tries. It  is  also  important  that  you  know  the  basis  on  which 
duties  are  levied,  as  tariff  rates  have  a  direct  and  vital  bearing 
upon  problems  of  paddng  and  shipping.  In  some  countries,  if 
several  articles  are  padced  in  one  container,  the  entire  shipment 
will  carry  the  highest  rate  that  applies  to  any  one  article  in  the 
lot.  In  other  countries  the  duties  are  levied  on  the  gross  weight, 
and  it  is  important  to  make  the  packing  as  light  as  is  consistent 
with  safe  transit.  In  still  other  countries  duties  are  levied  on 
tiie  net  weight,  which  inchides  the  article  itsdf  and  the  unme* 
^te  container  in  which  the  artide  is  phced,  but  not  the  weight 
of  the  outside  case  or  crate. 

''In  writing  for  information  in  regard  to  foi«|gn  rates  of  duty* 


HOW  GOVERNMENT  HELPS  EXPORTER  853 

it  is  necessary  to  give  a  detailed  descr^ytion  of  the  artide  in^ 
volved  and  to  specify  the  particular  country  or  countries  for 
which  tariff  information  is  desired.  It  is  advisable  to  confine  in- 
quiries to  information  needed  immediately  rather  than  to  ask 
for  comprehensive  statements  for  future  reference,  which  may 
be  out  of  date  by  the  time  they  are  used. 

"You  may  obtain  information  regarding  license  fees  for  com- 
mercial travelers  and  customs  treatment  of  their  samples.  These 
topics  should  be  carefully  considered  if  you  contemplate  sending 
a  traveling  representative  to  foreign  countries. 

''You  can  get  consular  regulations  which  prescribe  the  number 
of  copies  of  the  bill  of  kding  that  must  be  transmitted  for  the 
use  of  the  customs,  the  number  of  consular  invoices  that  must  be 
prepared,  and  the  way  in  which  they  must  be  prepared. 

"You  can  get  information  regarding  international  revenue 
taxes  that  are  imposed  in  foreign  countries,  so  that  you  may 
know  whether  your  product  will  be  subject  to  an  additional  tax 
after  it  enters  the  country. 

"Infonnation  is  available  on  foreign  trade-marks  and  patents, 
so  that  you  may  protect  your  patents  and  trade-marks  in  foreign 
countries. 

"You  can  obtain  information  on  foreign  expcMt  embargoes, 
import  prohibitions  and  restrictions,  and  black  lists.  Knowledge 
of  these  r^;ulatkin8  is  especially  important  at  present  (This  r^ 
fers  to  waivtinie  conditions.)" 

How  District  Offices 
May  Help  Exporter 

The  Bureau  also  cscplains  in  a  pamphlet  how  tiie  district  of- 
fices may  help  those  desiring  information  on  foreign  trade.  It 
says: 

"District  offices  of  the  Bureau  of  Foreign  and  Domestic  Com- 
merce were  established  to  expedite  the  distribution  of  commercial 
information  to  ascertain  the  needs  of  the  buriness  men  of  the 
country,  and  to  estaUish  doser  co-operation  between  govern- 
ment and  private  agencies  interested  in  the  extension  of  foreign 
trade. 

"Each  district  office  has  on  file  confidential  information  rt- 
garding  trade  opportunities,  lists  of  importers  in  foreign  coun- 
tries, trade  dtrectoiks,  etc. 

"Each  district  office  receives  specifications,  samples,  exhibits. 


354 


EXPORTING  TO  THE  WORLD 


etc.,  for  a  limited  time,  and  these  may  be  inspected  by  inteictled 

persons. 

"Each  district  office  anranges  conferences  between  exporters 
•nd  ccwisalar  officers  and  commercial  agents  when  the  latter  visit 
district  offices  during  leave  absence  in  this  country. 

"Each  district  office  makes  a  special  study  of  the  needs  of  the 
district  in  which  it  is  located,  and  the  Bureao  endeavors  to  equip 
each  of  its  district  c^fices  to  meet  the  demands  peculiar  to  their 
fields. 

"Each  district  office  keeps  on  file  all  publications  of  the  Bureau, 
as  well  as  publications  of  other  branches  of  the  government  that 
will  be  of  assistance  to  American  exporters.  Eadi  office  acts  as 
sales  agent  for  the  Superintendent  of  Documents,  Washington, 
D.  C,  for  the  sale  of  the  Bureau's  publications.'* 

How  to  Use  Trade 

Mention  has  already  been  made  of  the  Trade  Opportunity 
Service  that  the  Bureau  offers  to  exporters.  It  should  be  noted 
that  the  names  and  addresses  of  the  foreign  importers  desiring 
the  goods  are  not  given  in  the  Commerce  Reports  but  ar«  fur- 
nished to  bona  fide  American  firms  upon  application  to  the 
Bureau  at  Wasliington  or  any  of  the  district  offices. 

In  applying  for  such  names  and  addresses  the  inquirer  need 
refer  only  to  the  number  of  the  announcement  as  published  in 
the  Commerce  Reports.  A  separate  applicationn  on  the  firm's 
letterhead  shcmld  be  made  for  etch  "opportunity"  desired. 

Whoi  the  confidential  information  furnished  regarding  an  op- 
portiinity  for  sales  in  foreign  countries  is  too  detailed  to  be  given 
in  a  "trade  opportunity"  announcement,  it  is  embodied  m  a  con- 
fidential bulletin  or  circular,  which  is  sent  to  &tns  that  are  listed 
in  the  E^qxMters'  Index  maintained  fay  tlie  Bimm  and  its  dis- 
trict offices. 

Those  listed  on  the  Exporters'  Index  receive  the  following 
service: 

"Confidential  circulars  and  bulletins  of  various  sorts  relating 
to  inquirers'  particular  lines. 

"The  calling  of  firm's  attention  to  fecial  articles  in  Com- 
merce  Reports  containing  requests  for  special  catalogues  of 
firm's  line,  or  relating  to  markets  for  firm's  product 


HOW  GOVERNMENT  HELPS  EXPORTER  365 


Firm  is  advised  regarding  trade  opportunities  for  the  sale 

of  its  product. 

Firm's  name  is  furnished  to  foreign  inquirers  asking  for  Amer- 
ican sources  of  merchandise  and  suppUes. 

Firms  are  given  ptompt  notice  of  every  special  buU^in  pub- 
lished by  Ibe  BureatL 

Firms  desiring  to  be  recorded  on  the  Exporters'  Index  must 

fill  out  a  form,  stating  the  nature  of  its  business  and  the  kinds 
of  goods  manufactured  or  exported.  These  forms  to  be  received 
at  the  district  offices. 

Branch  officts 
of  the  burem 

The  bureau  operates  branch  offices  fot  the  convenience  of 
exporters  in  the  following  cities: 

New  York,  734  Custom  House ;  Chicago,  504  Federal  Building ; 
Boston,  1801  Custom  House;  St.  Louis,  402  Third  National 
Bank  Building;  New  Orleans,  1020  Hibemia  Bank  Building; 
San  Francisco,  307  Custom  House;  Seattle^  848  Henry  Building. 

Besides  these  brandies  ^tut  Bureau  maintains  co-operative 
offices  in  the  following  places: 

Cleveland  Chamber  of  Commerce;  Philadelphia  Chamber  of 
Commerce;  Cincinnati  Chamber  of  Commerce;  Los  Angeles 
Chamber  of  Commerce ;  Chattanooga,  Southern  Railway  System, 
South  American  Agent ;  Portland  (Or^n)  Chamber  of  Com- 
merce; Daylon,  Ohio,  Greater  Dayton  Assodation,  and  the  Soudir 
em  Railway,  Gndnnati,  96  Ingalls  Building. 

Amenem  Consul§  as 
Trade  Representatives 

American  Consuls  are  government  officials  serving  for  the 
benefit  of  American  commerce  primarily.  They  are  not  sup- 
posed to  serve  any  particular  mdividual  or  set  of  individuals. 
The  information  they  obtain  as  to  commerce  and  trade  in  foreign 
countries  is  for  all  the  people  that  are  interested  in  it  It  has 
already  been  stated  how  American  consuls  s«id  in  regular  reports 
to  the  Bureau  of  Foreign  and  Domestic  Commerce  which  are 
later  published  in  Commerce  Reports  and  other  publications  of 
the  department.  This  is  an  invaluable  service  which  private 
enterprise  would  find  difficult  to  dupUcate. 

Consuls  are  supposed  to  remain  in  certain  fields  for  a  term 


3oe  EXPORTING  TO  THE  WORLD 


tlie  length  of  wliich  is  detennined  by  the  authorities  in  Washing- 
ton. Sometimes  consuls  are  moved  about  from  one  country  to 
the  other  with  reckless  abandon.  The  writer  knows  of  one 
veteran  in  the  Consular  Service  who  has  been  in  seven  different 
countries  within  the  last  seven  years.  The  moment  he  became 
acquainted  with  tiie  customs  and  practices  of  the  people  of  one 
country  he  was  transferred  to  another  country  where  he  had  to 
begin  all  over.  The  language  he  had  learned  in  the  former 
country  was  of  no  use  to  him  in  the  latter.  Why  these  constant 
transfers  are  made  is  a  question  which  the  authorities  in  Wash- 
ington alone  can  answer.  There  is  no  question  that  it  cripples  the 
service  and  that  it  reduces  efficiency.  It  takes  time  to  learn 
the  customs,  language,  the  laws  and  the  modes  of  living  of 
the  people  of  a  foreign  country,  and  this  is  essential  when 
consuls  are  expected  to  be  thoroughly  capable  of  rendering 
comprehensive  and  authentic  reports  on  business  conditions 
for  the  study  of  American  business  men. 

Another  thing  that  has  been  the  subject  of  considerable  com- 
plaint is  the  poor  pay  that  is  given  the  members  of  our  Consular 
service.  Poor  pay  naturally  attracts  applicants  of  an  undesirable 
standard  as  a  rule,  but  it  must  be  said  in  justice  to  our  present 
consular  staff  that  the  majority  of  them  are  men  of  the  highest 
type  who  have  perfoimed  adnuraUe  service  in  spite  of  the  handi- 
caps they  have  been  put  to  because  of  the  inadequate  pay  they 
receive.  This  important  point  was  touched  upon  by  Edward 
Prizer,  President  of  the  Vacuum  Oil  Company  in  an  address 
before  the  Sixth  National  Foreign  Trade  Convention  when  he 
said: 

''Another  demand  business  should  make  on  ^e  government 
is  that  our  consular  service  should  become  a  real  and  definite 
annex  of  foreign  trade  effort. 

**When  I  first  came  in  contact  with  our  foreign  consuls  some 
thirty  years  ago,  I  found  they  r^;arded  themselves  as  the  favorites 
of  pohtical  circumstance;  they  knew  their  positions  were  not 
peni^ient  and  took  more  mterest  in  social  than  in  business 
activities.  Some  of  them  really  seemed  to  regard  insistence  on 
help  m  solving  commercial  problems  as  an  interruption  o£  their 
leisure. 

'There  has  been  a  great  unprovement  smoe  then,  for  daring 
the  past  fifteen  years  the  penmmd  of  our  oonsukr  service  has 
been  mainly  comprised  of  substantial,  educated  and  well-informed 
men,  who  take  a  great  interest  in  their  work,  and  I  take  pleasure 


HOW  GOVERNMENT  HELPS  EXPORTER  367 


in  stating  that  our  company's  organizations  throughout  the 

world  have  found  these  men  willing  and  useful. 

''We  should  insistently  demand  that  our  consular  service  should 
be  in  every  particular  so  <Mganized  as  relates  to  permanence  of 
employment,  compensadon  mid  promotion,  that  entrance  into  it 

will  be  zealously  sought  by  our  young  men  of  greatest  capability 
and  promise. 

"One  of  the  real  deterents  to  young  men  of  this  type  seeking 
consularships  is  the  financial  coosiderationr-the  pay  is  entirdy 
inadequate. 

American  consuls  cannot  be  effective  in  a  foreign  country  un- 
less they  can  meet  influential  people  on  an  equality,  instead  of 
being  compelled,  as  is  now  frequently  the  case  because  of  finan- 
cial reasons,  to  live  as  an  outsider  from  social  Uf e  and  merely  a 
sojourner  in  the  land  where  they  are  supposed  to  be  eflkient  r^ 
resentatives  of  a  rich  and  powerful  nation. 

'*They  should  not  be  required  to  meet  unavoidable  living  ex^ 
penses  out  of  personal  income,  but  should  be  so  paid  that  they 
are  in  a  position  to  meet  on  an  equality  influential  government 
oflicials  and  the  heads  of  industrial  and  merchandising  firms  and 
rqiresentative  citizens  in  the  country  to  which  they  are  accredited. 

^The  British  government  is  fully  alive  to  the  need  of  proper 
and  well-paid  consular  representation,  for  it  has  just  announced 
that  it  proposes  to  expend  annually  1,000,000  pounds  for  consuls 
and  an  additional  quarter  of  a  million  pounds  for  commercial 
attaches. 

"Our  consular  sendee  ^uld  be  safeguarded  from  the  blight- 
ing shadow  of  political  control  or  preference,  and  there  should 
run  through  it  to  the  remotest  sections  of  the  world  the  certainty 

that  capability  is  prized  and  that  merit  will  be  recognized  and  re- 
warded. It  should  be  trained  in  business  conditions  and  methods, 
and  encouraged  to  be  constantly  alert  to  business  opportunities 
for  American  industry.  Periodical  consular  reports  of  a  general 
character,  whUe  interesting  and  helpful,  are  not  akme  sufficient 
There  nmst  be  concreteness  of  information  and  directness  of 
support 

"A  gentleman  told  me  that  at  a  certain  South  American  port  he 
found  great  difficulty  in  obtaining  any  really  useful  information 
to  assist  his  sales  effort ;  so  almost  in  despain  he  appealed  to  the 
German  consul  ,who  courteously  aided  him  in  his  dilemma.  He 
found  tins  consul  had  prepared  a  complete  card  index  of  com- 
mercial conditions.  It  covered  not  only  tiie  usual  statistics  of 


358  EXPORTING  TO  THE  WORLD 


iiiqx>rt8,  consumptioii,  etc»  but  went  into  such  intunate  details  as 
to  the  standing  and  credit  of  individiial  merchants,  fines  of 

products  they  already  handled,  or  might  be  induced  to  carry.  It 
was  his  practice  to  send  to  his  government  at  home  all  this  in- 
formation which  was  available  for  the  German  exporter.  What 
was  being  done  by  him  at  this  port  was  doubtless  being  dupli- 
cated at  hundreds  of  other  centres  of  commercial  opportunity. 

•*We  should  demand  that  our  consular  service  be  run  on  busi- 
ness lines  and  principles,  and  controlled  by  executives  of  business 
vision  and  grasp ;  and  then  that  the  politicians  be  forced  to  keep 
their  hands  off  whether  an  administration  diaoges  or  continues." 

How  to  Make  Use  of 
Consular  Service 

Don't  write  to  the  consul  in  a  foreign  country  for  information 
unless  you  have  made  inquiry  at  the  Bureau  of  Foreign  and  Do- 
mestic Commerce  in  any  one  of  its  branches  in  this  country. 
Perh^  the  information  you  may  deare  is  already  gathered  for 
you.  The  Bureau  has  thousands  of  reports  on  business  and  com- 
mercial conditions  in  foreign  countries  of  a  general  character ;  it 
has  also  a  great  number  of  reports  of  a  specific  nature  which 
have  been  prepared  by  trade  commissioners  who  are  experts  in 
the  lines  they  were  sent  out  to  make  rqKnrts  on.  Periiaps  one 
of  these  rtpom  is  just  Ae  thhig  you  may  need,  so  do  not  write 
to  the  consul  until  you  have  first  tried  the  Bureau. 

Letters  should  not  be  addressed  to  consuls  personally.  The 
address  should  be  the  American  Consul  or  the  American  Consul 
General.  This  is  necessary  in  cwrder  to  avoid  deUy  in  receiving 
replies  to  inquiries.  The  consul  may  be  away  on  his  vacation 
and  the  letter,  if  addressed  to  him  personally,  will  not  be  opened 
until  he  returns.  Also,  when  communicating  with  consuls  the 
writer  should  be  sure  that  sufficient  postage  is  placed  on  the  en- 
velope otherwise  the  consul  must  pay  double  the  amount  due  for 
such  negligence.  No  return  postage  is  necessary  for  letters  re- 
quiring answers  as  all  answers  are  made  through  tiie  DqMut- 
ment  of  State. 

Emphasis  must  also  be  onde  on  ^  fact  that  consuls  are  not 
in  the  employ  of  private  individuals  but  in  the  service  of  the 
United  States  Government.  In  this  capacity  they  cannot  be  ex- 
pected to  make  sales  for  manufacturers  or  to  show  samples  to 
prospective  custcmiers  m  an  effort  to  obtain  orders.  Th^  are 


HOW  GOVERNMENT  HELPS  E2tPORTER  369 


prohibited  from  ddng  this.  Gmsuls,  however,  may  distribute 
catalogues  for  manufacturers  without  prejudicing  their  official 

position.  This  is  a  form  of  co-operation  that  they  are  only  too 
willing  to  extend,  but  very  few  manufacturers  take  advantage 
cf  the  opportunity  to  advertise  their  merchandise  by  this  method. 

Above  all  it  most  be  remembered  that  consuls  are  very  busy 
men.  They  have  a  great  many  duties  to  perform;  ^ey  have  re- 
ports to  make;  they  have  a  routine  to  follow  almost  every  day, 
and  they  must  not  be  disturbed  by  needless  inquiries  or  requests. 
The  consular  service  is  a  great  machinery  for  the  development 
of  American  business  abroad.  Its  proper  ba"4ll"g  will  bring 
the  desired  results. 

Other  sources  of 
Export  Information 

It  must  be  remembered  that  there  are  other  sources  of 
information  besides  the  Bureau  of  Foreign  and  Domestic  Com- 
merce, where  American  manufacturers  and  exporters  may- 
obtain  data  in  connection  with  foreign  trade.  These  sources 
are  gradually  growing.  There  arc  at  present  in  the  United 
States  many  organizations  directly  aind  exclusively  inter- 
ested in  the  development  of  trade  in  foreign  countries.  Their 
chief  functions  are  to  obtain  reliable  information  as  to  oppor- 
tunities, conditions,  credits,  legislation,  etc.  Other  organi- 
zations, more  directly  interested  in  domestic  affairs,  have 
estaUished  foreign  trade  departments  whose  functions  are 
to  keep  their  members  in  close  touch  with  conditions  abroad. 

The  following  organizations  are  of  invaluable  service  to 
ihose  interested  in  foreign  trade: 

The  National  Foreign  Trade  Council,  New  York  Qty. 

The  American  Manvfacturers'  Export  Association,  New 
York  City. 

The  Philadelphia  Commercial  Museum,  Philadelphia. 
The  United  States  Chamber  of  Commerce,  Washington, 
D.  C 

The  Pan-American  Union,  Washington,  D.  C. 

Chambers  of  Commerce  in  the  various  cities  of  the  United 
States  added  foreign  trade  departments  to  enable  their  mem- 
bers to  obtain  infcmnation  from  foreign  fields.  Some  of 
these  organisations  are: 


oGO 


EXPORTING  TO  THE  WORLD 


<  * 


f 


The  Chamber  of  Commerce  of  New  York;  the  Chambers 
<^  Commerce  of  San  Frandsco,  Los  Angeles,  and  San  Di^;o» 
California ;  Portland,  Or^n ;  Seattle,  Washington ;  St.  Louis,. 
Missouri;  Detroit,  Michigan;  Cleveland,  Ohio;  New  Orleans, 
Louisiana;  Atlanta,  Georgia,  etc. 

Then  there  are  the  Merchant's  Association  of  New  York 
City,  the  Pittsburgh  Foreign  Trade  Commission,  the  Mass- 
achusetts State  Industrial  Commission,  Boston,  the  Chicago 
Association  of  Commerce,  and  numerous  other  organizations 
of  a  similar  character  that  devote  considerable  attention  to  for- 
eign trade.  The  growing  number  of  combination  Chambers  of 
Commerce  and  associaticms  in  this  country  should  not  be 
overlooked.  For  instance,  there  is  an  Argentine-American 
Chamber  of  Commerce  in  New  York  City;  a  Chilian- Ameri- 
can commercial  association  in  the  same  city.  Similar  org- 
anizations interested  in  trade  with  various  European  and 
Far  Eastern  countries  are  rapidly  taking  shape. 

Certain  foreign  countries  are  following  the  example  of  the 
United  States  in  sending  commercial  attaches  to  foreign 
fields.    In  New  York  City  there  may  be  found  commercial 
representatives  from  European  and  Latin  American  countries 
from  whom  valuable  information  may  be  obtained. 

Trade  Jowrmds  Musi 
Not  Be  Overiaoked 

# 

Manufacturers  and  exporters  should  subscribe  to  all  reliable 

trade  publications.  In  these  may  be  found  invaluable  infor- 
mation dealing  with  methods,  changes,  markets,  conditions, 
etc* 

Among  these  journals  may  be  mentioned 

The  Worid's  Markets  The   American  Export 

Export  Trade  Monthly. 
Exporters  and  Importers  Pstt-Pscific. 

Journal 
me  isxporters  ncview 
The  Americas. 
Pacific  VattM. 

There  are  a  few  magazines  whose  functions  are  not  to 
exclusively  cover  the  foreign  field,  but  who  occasionally  pub- 


Commercial  America 

Asia. 

The  Nation's  Business 
Weekly  Export  Bulletin 
Commerce  and  Finance 


HOW  GOVERNMENT  HELPS  EXPORTER  361 

lish  articles  of  importance  to  exporters.  Among  these  may 
be  mentioned  "Printers'  Ink,"  "The  World's  Work,"  "Sys- 
tem," etc 

Book  Exporters 
Should  Have 

An  exporter  should  have  a  well  equipped  library.  There 
are  many  directories  and  encyclopedias  now  on  the  market 
that  should  be  on  the  shelves  ctf  a  well  regulated  export 
office.  Among  these  are: 

^*^The  Stateman's  Year  Book,  Macmillan  Co.  Annual.  New 
York. 

^   Exporters'  Encyclopedia  .   Exporters'  Encyclopedia  Co. 
AnnuaL  New  York. 

American  Export  Trade  Directory.   Johnson  Export  Pub- 

lishing  Co.,  New  York. 

i^Customs  Tari£Es  of  the  World.  Kelly  Publishing  Ca,  New 
Ifork. 

A  few  choice  books  on  Foreign  Trade  like  the  following 

should  also  be  included: 
^Practical  Exporting.    Hough.  i 

£3q[K>rting  to  Latin  America.  Filsinger. 

Principles  of  Foreign  Trade.  Savay. 

American  Methods  in  Foreign  Trade.  Vedder. 
'  Business  Training  Corporation  (Set  10  volumes). 
"  Selling  Latin  America.  Aughinbaugh. 
^  Ocean  Traffic  and  Trade.  Hough. 

History  of  Foreign  and  Domestic  Commerce  of  United 
States.  Johnson. 

Commerce  and  Industry.  Smith. 

Trade  of  the  Wwld.  Whelpley. 

T«he  Theory  and  Practice  of  International  Commerce.  Wolfe. 

Official  Report  of  National  Foreign  Trade  Council. 

Nor  should  a  good  atlas  be  overlooked  for  the  library. 

Some  of  these  ate: 

Atlas  of  the  World's  Commerce.  Bartholomew. 
Geographical  Manual  and  Atlas.  Mawson. 
To  complete  the  list,  all  the  publications  of  the  Bureau  of 
Foreign  and  Domestic  Commerce  siiould  be  included. 


CbaptksXXII 


THE  WORUyS  MARKETS 

The  world  is  preparing  for  peace.  The  Great  War  hardly 
over,  the  nations  of  the  world  are  hastening  as  fast  as  possible 
the  readjustment  that  amts  after  the  conflict.  They  are  taking 
stodc  of  the  fotnre.  The  adjusters  have  not  yet  finished  their 
estimates  of  the  losses  that  the  great  catastrophe  produced.  The 
money  cost  alone  has  been  over  $100,000,000,000.  The  human 
cost  has  been  enormous.  MilUoos  of  men  have  been  slain; 
women  and  children  have  lost  their  lives  by  the  thousands. 
Entire  countries  have  been  laid  waste.  Pxoduction  has  been 
stopped.  Old  nations  have  lost  their  former  positions;  new 
naticms  have  sprung  up;  old  trade  routes  have  been  aban- 
doned, and  new  ones  have  grown  up  in  their  stead. 

In  this  period  of  readjustment  the  United  States  is  taking 
an  important  part.  This  country  is  helping  Europe  get  back 
on  her  feet  We  are  finandng  big  enterprises  over  there ; 
we  arc  sending  foodstuffs  and  other  materials  of  absolute 
necessity.  Those  nations,  for  years  to  come,  will  require 
material  assistance  in  one  form  or  another. 

As  our  trade  has  expanded  to  other  sections  of  the  globe, 
we  have  learned  that  Europe  is  not  alone  in  her  need  of 
foodstuffs  and  manufactured  materials  as  well  as  capital  from 
outside  sources.  There  is  stiU  considerable  development 
work  to  be  undertaken  in  other  continents.  Mineral  resources 
of  unlimited  value  are  yet  to  be  tapped ;  transportation  facili- 
ties such  as  the  building  of  railroads,  highways,  canals,  etc., 
are  needed  in  the  backward  countries.  Where  American 
concerns  are  to  participate  in  this  kind  of  work,  the  develop- 
ment of  trade  is  sure  to  follow.  We  are  capable  of  manu- 
facturing all  the  tools  necessary  for  such  enterprises,  and 
one  can  readily  see  the  importance  of  participating  in  these 
vast  improvements. 
The  use  of  modem  metiiods  of  farming,  of  busmess,  and 


THE  WORLD'S  MARKETS 


363 


of  industry,  is  also  helping  to  improve  the  markets  in  foreign 
countries  for  American  manufactured  articles.  We  are  now 
selling  farm  tractors  in  places  where  only  the  most  primitive 
methods  had  been  used  in  the  past.  We  are  selling  type- 
writers to  countries  where  such  an  instrument  has  not  been 
as  generally  adopted  for  business  purposes  as  in  the  United 
States.  We  are  also  furnishing  machinery  for  various  in- 
dustries to  replace  the  old  and  antequated  processes  of  man- 
ufacture. We  are  sending  to  the  four  comers  of  the  earth 
articles  aimed  to  increase  the  comfort  of  those  who  buy  from 
us.  We  are  introducing  American-made  automobiles  in  every 
country.  The  popularity  of  American  manufactures  is  ap- 
parent. 

The  aim  of  this  chapter  is  to  review  as  briefly  as  possi- 
ble, the  markets  in  foreign  countries  available  to  manufac- 
turers and  exporters.  Obviously,  a  detailed  description  of 
ocmditions  in  foreign  countries  is  impossible  in  a  chapter,  but, 
perhaps,  a  brief  summary  of  the  available  markets  will  be 
sufficient  to  enable  the  reader  to  obtain  a  general  idea  of  tiie 
immensity  of  the  field  in  which  the  manufacturer  and  exporter 
can  operate. 

A  study  of  the  market  divisions  follows.  For  the  purposes 
of  this  study  Latin-America  will  be  grouped  in  the  following 

manner : 

LatmAmefiea 

Groupe  I.  (b)  Peru. 

(a)  Mexioo.  (c)  Bolivia. 

(b)  The  West  Indies.  (d)  Chile. 

(c)  Central  America.  GrOttO  III. 

(d)  Colombia.  Argentina. 


(b)  Uruguay. 


(e)  Venezuela. 

(f )  The  Guianas.  .  ^  _ 

(g)  Panama. 

Group  II.  Group  IV. 

(a)  Ecuador.  (a)  Brazil. 

Mexico 

Mexko  ranks  fifth  among  the  natfons  of  the  western  hem- 
isphere in  size.  It  follows  Canada,  the  United  States,  BrazU 
and  Argentina.    In  population  it  ranks  third,  following  the 


364  EXPORTING  TO  THE  WORLD 


•««  of  the  country  is 
''^  population  in  1910  was 
16.088,807.  Of  these  20  per  cent  are  white,  37  per  cent  Indian, 
and  43  per  cent  of  mixed  blood.   There  are  over  lOOfiW  fm- 

"IfZ^""  °*  •«  Spaniards  and 

<»0,000  Americans. 

The  climate  of  the  country  may  be  divided  into  three  zones 
whKh  cover  three  ascending  geographical  regions.   The  low- 
est is  comprised  of  the  coast  region  embracing  the  eastern 
and  western  coastal  plains  which  reach  an  altitude  of  3,000 
Above  this  altitude  and  np  to  6,000  feet  the  second 
or  middle  zone  is  located.   The  climate  here  is  mild.  Above 
tte  6,000-foot  altitude  is  found  the  tierra  fria,  or  cold  land. 
Dunng  the  summer  in  the  lower  zone  the  heat  is  intense  and 
unhealthful,  and  the  only  measure  of  relief  may  be  found 
near  the  coasts  where  the  ocean  breezes  are  encountered  The 
mean  annual  temperature  in  this  zone  is  from  75  to  85  degrees. 

Themost  delightful  region  of  all  is  the  middle  zone  which  en- 
loys  a  temperate  climate.  There  is  very  little  humidity  here- 
the  atf  IS  dry,  and  cool,  and  the  climate  is  healthful.  The  mean 
annual  tempmture  ranges  from  «0  to  77  degrees.  The  cold 
z«ie  covering  altitudes  from  6,000  to  9,000  feet  has  a  wide 
nnge  of  temperature.  In  the  higher  regions  there  is  a  wet 
and  dry  season.  The  wet  season  begins  in  June  and  lasts 
until  October,  although  it  is  not  continuous. 

Mexico  is  one  of  the  richest  countries  in  minerals  in  the 
woiM.  For  the  last  four  centuries  she  has  produced  nearly 
one-half  of  the  world's  silver,  and  now  she  is  producing  about 
one-third  of  the  worid's  total  output  ^ 

Metals  found  in  Mexico  are  platinum,  gold,  snver,  copper, 
zmc.  l«Ml.  mm,  mercury,  manganese,  antimony,  tin,  bismuth, 
and  tenunum.  An  idea  of  Mexico's  mineral  production  may 
be  gamed  from  the  following  table  showing  the  value  of  the 
most  important  metals  expressed  in  terms  of  pesos  (about 
50  cents) ; 

Pesos. 

 48,488341 

Silver  76,406,754 

Copper   26.172,214 

^^^^    6,808,465 

Coal  (estimate)   4,400,000 


THE  WORLD'S  MAR|grrS 


866 


Pesos. 

Petroleum  (estimate)   2,800,000 

Iron  (estimate)   1,200,000 

Zinc  (estimate)   1,150,000 

Mexico's  agricultural  resoorces  are  far  from  being  fully 
developed.  Over  600,000  square  miles  of  the  entire  country 
are  capable  of  being  turned  into  great  producing  regions. 
Lack  of  transportation,  antique  methods  of  farming,  and  the 
.scarcity  of  farm  machinery  have  kept  Mexico  back  in  3Lgnr 
culture,  but  the  outlook  is  encouraging  as  the  government  is 
now  lending  its  aid  to  the  industry,  and  the  importation  of 
farm  machinery  from  the  United  States  is  increasing.  With 
the  development  of  transportation,  Mexico's  agricultural  riches 
should  be  enormous.  Mexico's  principal  agricultural  products 
are  maize,  cotton,  henequen,  wheat,  sugar  and  molasses,  spir- 
its, coffee,  and  beans.  Encouragement  is  offered  by  the  gov- 
ernment for  the  growing  of  tobacco,  rubber,  cacao,  chicle  and 
vanilla.  .  The  vanilla  of  Mexio  is  of  a  very  high  quality  and 
has  a  large  demand  in  foreign  countries. 

The  most  important  industries  of  the  country  are  the  manu- 
facture of  textiles,  sugar,  alcohol,  and  cigars  and  curettes. 
Ten  years  ago  there  were  142  cotton  factories  in  the  country. 

The  oil  industry  in  the  Tampico  district  is  by  far  one  of 
the  most  important  of  all  Mexico's  resources.  Mexico  is 
next  to  the  United  States  in  the  production  of  crude 
petroleum. 

Principal  exports  from  the  United  States  to  Mexico  are 
coal,  lumber,  cotton,  boots  and  shoes,  automobiles,  electrical 
madiinery,  steel  rails,  structural  steel,  electrical  instruments, 
pipes  and  fittings,  meat  products,  cottonseed  oil. 

Statistics  of  Mexico's  foreign  commerce  for  a  period  oi  nine 


years  follow: 

Year.  Imports.  Exports. 

1910  $  97,433,000  $130,023,000 

1911   102,937,000  146,877,000 

1912   91,331,000  148,994,000 

1913   97,886,000  150,203,000 

1914   78.000,000  aiM),000,000 

1816   68,000,000  186,000,000 

1916    83,000,000  168,000,000 


366 


EXPORTING  TO  THE  WORLD 


Y««r.  Imports.  Exports. 

  138,000,000  182,000,000 

1918   192,000,000  »8,000,000 

Wh«,  peace  is  oompfetely  rertoied  in  Mexico  she  will  resume 
to  old  place  as  one  of  Unde  Sam's  biggest  customers.  Mil- 
aooi  of  dcllan  of  American  capital  are  invested  in  the  Southern 
Kqmblic,  thousands  of  American  citizens  are  Uving  in  the  cotmtrr 
and  only  because  of  the  unsettled  state  of  her  poUtics  has  W 
ICQ  failed  to  resume  her  old  position  as  a  great  buyer  of  Ameri- 
can  goods.  In  ^te  of  troubled  conditions  statistics  show  that 

Wl^fiWfiOO  worth  of  merchandise  from  the  United  States 

The  West  Indies 

The  total  area  of  the  West  Indies  is  estimated  at  100000 
square  miles;  it  has  a  population  of  about  9.000,000.  The  West 
Indies  consist  of  the  great  archipelago  extending  from  Flor- 

tXT^!^  ^  °'  ^  ^•""'•^^  The  islands  in- 
dude  the  Bahamas,  Greater  Antilles,  Lesser  Antilles,  includ- 

Tnf.  H  ^^^It""^'  ^"^  Windward  and  Caribee  Isl- 
ands the  Trinidad-Tobago  group,  and  the  Key,  or  coral  reef..' 

to^rlntdal"  ^"^^"^  ^  ^ 

Matr  I"  ^"t""*-  hurricanes  risit 

the  islands.  The  inhabitants  are  chiefly  negroes  and  mnlat- 
toes.  except  .n  Cuba  and  Porto  Rico  where  the  Spaniards  and 
Americans  predominate. 

PoB&ally.  ti»  West  Indies  may  be  divided  into  the  Repub- 
lH»  Of  Cuba.  Santo  Domingo  and  Haiti,  the  American  pW 
sion  of  Porto  Rico.  the  British  West  Indies,  French  wS^ 
Indies,  Dutch  West  Indies,  and  the  Knu^L  "^n  west 
the  Virgin  Islands.  Amencan  possession  of 

The  British  are  in  possession  of  Jamaica  and  dependemries. 


EXPORTS 
10  HMMitlis  ended 
ApriU  1920 

«1J74,«33.483 
!•  months  ended 
Apfil,  1919 
flj069.497^5 


VANCOUVO* 
SEATTLE 


EXPORTS 
10  months  ended  April,  r'20 
To  Cuba 

1296,911,311 
10  months  cndrd  April,  1919 


SXVORTS 

10  months  ended 
A|>ri1.  1920 
To  Europe 
|448^>91 1.418 
10  BMMiths  ended 
April,  1919 
*|3.601.929,910 


EXPORTS 

10  months  ended 

April, 

1920 

To  Mexico 

9117.004,878 

April, 

10  months  ended 

1919 

$97  ,U  11, 332 

EXPORTS 

10  flMMitha  ended  April,  192a 
To  Sontli  AflMrka 

1386,454.623 

10  months  ended  April,  1919 
$324,664,399 


CAf»C  TOWk 


EXPORTS 

10 

months  ended 

A  pril, 

1920 

To  Africa 

$93,174,904 

10 

mt>nths  ended 

April, 

1919 

$65,815,264 

EXPORTS 
10  months  ended  ^prii, 
1920 
To  Asia 
$651,600,924 
10  months  ended  April, 
1919 
$471,421,596 


EXPORTS 

10  months  ended 
April,  1920 

To  British  India 
$62,044,3(7 

10  montiis  ended 
April,  1919 
$35,676,933 


EXPORTS  " 
10  months  ended  April,  1920 
To  Ocesnia 
$145,011,197 
10  months  ended  April,  1919 
$167,123,752 


EXPORTS 

10  months  ended 

April, 

1920 

To  Australia 

$63,813,849 

10  months  ended 

April, 

1919 

$88,933,161 

aucklan£i 

0UNC|t^^ 


It. 


EXPORTS 
10  aioiitlis  ended  April,  1920 
To  Cuba 
1296,911,311 
10  months  ended  April.  I'^l^ 
1188,790,633 


EXPORTS 

10  numths  ended 
April.  1920 
To  Borope 
|4,181»91U418 
10  months  ended 
April,  1919 
*  $3,601,929^10 


EXTORTS 

10  awntlM  ended  April,  192U 
TW  looili  AflMffka 
|3SM54yi23 
10  months  ended  April,  1919 
^324,664,399 


EXPORTS 

10 

months  ended  -April, 

1920 

To  Asia 

$651,600,924 

10 

months  ended  April, 

1919 

$471,421,596 

EXPORTS 

10  months  ended 

April, 

1920 

To  Aftrta 

$9^,174»904 

10  months  eadad 

April, 

1919 

$65,815,264 

• 

EXPORTS 
10  months  ended  April, 
1920 
To  AMMIn 
$63,813,849 
10  months  ended  April, 
1919 
$88,933,161 


THE  WORLD'S  MARKETS 


367 


the  Bahamas,  Leewaixl  Islands  of  St.  Christopher,  Nevis, 

Montserrat,  Antigua,  and  Dominica,  the  Windward  Islands  of 
St.  Vincent,  St.  Lucia,  Grenada  and  the  Gi^nadines,  Barbados, 
and  Trinidad  and  Tobago. 

The  French  West  Indies  include  St  Bartholomew,  Guade- 
loupe, Martinique,  and  one-half  of  St.  Martin.  Fo«(  de  France 
is  a  naval  station. 

The  Dutch  West  Indies  include  one-half  of  St  Matti^,  St 
Eustache,  and  Saba,  near  Porto  Rico,  and  a  group  off  the 
Venezuelan  coast  including  Curacao,  Bonaire,  and  Aruba. 

The  Virgin  Islands,  now  belonging  to  the  United  States  in- 
clude St  Thomas,  St.  Croix,  St  John,  Crab,  and  Culebra.  St. 
Thomas  is  the  principal  island  with  an  area  of  140  square 
miles. 

The  West  Indies  serve  as  a  great  market  for  the  United 
States.  In  the  fiscal  year  of  1916  they  purchased  $191,195,791 
worth  of  goods,  as  against  $177,6^8,611  for  South  America. 
Cuba,  of  course,  was  the  heaviest  purchaser.  During  this 
same  fiscal  year  the  Islands  purchased  two-thirds  as  much  as 
Asia  and  the  East  Indies,  and  four  and  one-half  times  as 
much  as  all  of  Africa. 

Located  within  easy  shipping  distance  of  American  ports, 
the  West  Indies  serve  as  a  logical  customer  for  American 
manufacturers  and  exporters. 

The  growth  of  exports  to  this  region  is  reflected  in  the 
following  table: 


1915. 

1918. 

$95,750,004 

$227,156,047 

44,318,161 

54,043,349 

British  West  Indies. 

13,948,820 

21,432,437 

Dominican  Republic* . 

7,447,182 

16,156,443 

Haiti  

4,899,856 

9,069,275 

French  West  Indies. 

2,698,050 

5,357,451 

Dutch  West  Indies., 

1,269,808 

1,361,434 

882,442 

1,640^30 

$170,914,333 

$336,216,539 

The  total  for  1918  represents  an  increase  of  97  per  cent  over 
that  of  1915. 


868  EXPORTING  TO  THE  WORLD 


Of  all  these  regions,  Cuba,  of  course,  is  the  most  promising- 
market.  Her  imports  are  more  than  equal  to  that  of  all  of 
the  other  islands  put  together.  Coha's  pofchasmg  power 
has  been  greatly  increased  by  the  immense  wealth  derived 
from  the  sugar  industry.  The  state  of  this  industry  has  never 
been  better  in  its  history.  The  growii^  demand  for  foreign 
made  goods  in  Cuba  is  reflected  in  her  unports  for  the  follow- 


ing years: 

1914   $118;a02,000 

1916   140384,000 

1016   216,961,000 

1917   266,085,000 

The  percent  of  the  total  imports  of  Cuba  imported  from  the 
United  States  is  shown  in  the  following  table: 

1914   58.23% 

1915   67.36% 

1916   72.00% 

1917   74.00% 


Since  tiie  b^;inntng  oi  the  Republic  in  1902  the  foreign 
commerce  of  Cuba  has  increased  more  than  200  per  cent. 

Of  the  total  foreign  trade  of  Porto  Rico,  $137,683,304,  that 
with  the  United  States  amounted  to  $124,460,747  in  the  fiscal 
year  1917-1918.  Porto  Rico's  needs  are  for  iron  and  steel 
manufactures,  wheat  flour,  cotton  cloths,  shoes,  automobiles, 
paper,  etc. 

The  Dominican  Republic  was  taken  over  by  the  United 
States  military  authorities  in  1916.  Under  military  rule  the 

country  has  made  rapid  progress  in  commerce,  the  total  for 
1917  amounting  to  $40,026,394,  an  increase  of  182.68  per  cent 
over  1908. 

The  Dcnninican  Republic's  principal  imports  from  the 
United  States  are  cotton  cloths,  shoes,  iron  and  steel  manu- 
factures, machinery,  automobiles,  oils,  chemical  products, 
wheat  flour,  nieatSi  canned  and  preserved  meats. 

The  governments  of  Haiti  and  the  United  States  signed  a 
convention  on  July  1,  1916,  authorizing  the  latter  government 
to  take  charge  ol  the  collection  of  costoni%  the  supervision 


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of  the  monetary  system,  and  the  administration  of  the  finances 
of  the  Republic  for  a  term  of  years.  This  action  was  taken 
on  account  of  the  unsettled  political  situation  which  had  been 
retardmg  progress  m  the  island.  With  the  United  States  in 
virtual  control  there  is  an  opportunity  for  developing  the 
resources  of  the  island,  and  the  development  of  trade  with 
the  United  States.  For  the  fiscal  year  ended  June  30,  1918, 
cjq>orts  from  the  United  States  to  Haiti  were  $8,369,922  as 
against  $5,540,706  for  1914. 

Jamaica's  trade  with  the  United  States  is  growing.  Im- 
ports from  the  United  States  increased  from  48  per  cent  of 
the  total  m  1914  to  70  per  cent  in  1917.  Jamaica's  principal 
imports  from  the  United  States  are  manufactured  articles 
and  foodstuffs. 

The  United  States  has  shown  marked  gains  in  trade  with 
Trinidad  and  Tobago,  increasing  its  exports  to  the  Islands 
from  88  per  cent  of  tfie  total  in  1914,  to  36  per  cent  in  1916. 

For  the  fiscal  year  ended  June  30,  1918,  exports  from  the 
United  States  amounted  to  $6,997,946  as  against  $3,465,610 
for  1914. 

EiqH>rt8  from  the  United  States  to  Barbados  for  the  fiscal 
year  ended  June  80,  1918,  were  $2,701,156,  compared  with 
$1,412,934  for  1914. 

Those  desiring  to  do  business  in  Cuba  will  naturally  es- 
tablish their  headquarters  in  Havana,  the  principal  city  of  the 
Island,  and  one  of  the  most  prosperous  in  Latin-America. 
Business  in  Haiti  can  be  kx^ced  after  from  Port  Au  Prince. 

Central  America 

The  little  republics  oi  Central  America  are  potentially  rich 
in  natural  wealth.  Not  until  stable  governments  are  estab- 
lished in  the  majority  of  these  little  countries  will  it  be  ex- 
pedient for  American  business  men  to  enlarge  their  activities 
in  that  region,  however.  Central  America  consists  of  Guate- 
mala, Honduras,  Salvador,  British  Honduras  Nicaragua, 
Costa  Rica  and  Panama. 

The  present  population  of  Central  America  is  estimated  at 
between  6,000,000  and  7,000,000. 

The  United  States  is  the  principal  buyer  of  Central  Amerl- 


870  EXPORTING  TO  THE  WORLD 


can  products  as  well  as  the  principal  source  of  supply.  Ameri- 
can capital,  also,  is  heavily  invested  in  those  countries,  with 
the  excq^tion  of  British  Hoodnnui  where  British  capital  is  in 
control  of  the  Inmber  industry  and  in  Guatemala  where  the 
Germans  control  the  coffee  industry. 

The  principal  exports  by  countries  are  as  follows:  Costa 
Rica  and  Honduras,  bananas;  Salvador  and  Guatemala,  cof- 
fee; British  Honduras,  timber;  Nicaragua,  coffee  and  ba- 
nanas; Panama,  bananas. 

South  America  as  a  Field 
for  American  Merchandise 

South  America  proper  has  been  a  lucrative  field  for  American 
business  for  a  good  many  years.  There  is  a  mistaken  impres- 
sion in  this  country  that  South  America  only  recently  h^r^m^  ^ 
splendid  market  for  American  •y^^rphiindiifa  This  is  not  so. 
Statistics  before  the  war— lor  many  jrears  before  the  war— show 
tiiat  the  American  busmess  man  has  been  very  successful  in  the 
countries  making  up  that  great  continent.  Although  encounter- 
ing the  competition  of  German,  British  and  French,  merchan- 
dise produced  in  this  country  has  been  successfully  sold  m  that 
vast  region.  The  big  boom  in  busmess  with  South  America 
QM^ang  up,  however,  iriien  the  busmess  men  of  Europe  closed 
their  doors  to  engage  in  war.  The  South  Americans  then  began 
to  shop  in  the  United  States.  Thousands  of  new  customers  were 
placed  on  the  books  of  American  manufacturers  and  exporters, 
and  a  great  majority  of  these  have  become  permanent  clients. 

For  the  seven  months  ending  in  July,  1919,  we  sold  tm 
South  America  $26d»6d8,000  wOTth  of  merchandise  as  compaied 
to  $171,610,000  during  the  same  period  m  1918.  This  shows 
the  rapidity  vrith  which  the  United  States  is  developing  trade 
relations  v^rith  that  continent.  Argentina,  Brazil  and  Chile  are 
our  biggest  customers  in  that  continent 

The  followii^  is  a  summary  of  conditions  in  eadi  country: 

CoUmbm 

Colombia  occupies  the  northwest  oomer  of  the  South 
American  continent  The  area  of  this  country  is  about  440,- 
846  square  miles.  Its  climate  is  varied  owing  to  its  geo- 
graphic characteristics.  Thus,  in  the  lowlands  the  tempera- 
ture is  from  74  to  86  dqg;rees,  while  in  the  temperate  zone  the 


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371 


annual  mean  varies  from  62  to  72  deg^rees,  and  the  climate 
is  healthful  The  valleys  are  hot,  and  rainfall  is  heavy  on 

the  coast. 

Colombia's  mineral  wealth  is  extensive.  Gold  forms  a 
great  part  of  her  wealth.  Practically  all  the  emeralds  of  the 
world  come  from  G>lombia.  The  country  is  second  to  Rus- 
sia in  the  production  of  platinum  which  is  in  so  much  demand 
at  the  present  time.  Colombia  has  also  copper,  silver,  lead, 
iron,  mercury,  coal  and  manganese  while  recent  investigations 
have  shown  that  the  country  has  tremendous  possibilities 
in  the  petroleum  industry. 

The  country's  foreign  trade  for  a  period  of  eight  years  is 
reflected  in  the  following  table: 


Year.               Imports.  Exports. 

1910  $17,383,000  $17,625,000 

1911                     18,109,000  22,376,000 

1912...  23,965,000  32,2^2,000 

1913  28,635,000  34,315,000 

1914  20,979,000  32,633,000 

1915                    17,840,000  31,579,000 

1916                    28,922,000  40,000,000 

1917                  23,334,000  40,531,000 


Principal  exports  from  the  United  States  are  lard,  flour, 

cotton  goods,  iron  and  steel  manufactures,  etc. 

The  principal  port  is  Cartagena  which  is  an  important  com- 
mercial center. 

Veneguela 

Venezuela,  lying  along  the  north  coast  of  South  America, 
has  a  total  area  of  about  393,976  square  mUes.  Like  Colombia, 
Its  variation  of  altitudes  give  it  a  wide  range  of  climate. 

Gold,  copper  and  iron  supply  Venezuela  with  most  of  its 
mineral  wealth.  Venezuela  is  also  a  fine  agricultural  country, 
practically  one-fifth  of  the  population  being  engaged  in  this, 
industry.  The  principal  product  is  coffee  which  grows  in 
nearly  every  section  of  the  Republic.  In  1917  there  were 
33,000  coffee  plantations  which  had  over  200^000  acres  of  land 
under  cultivation.  Cacoa,  also,  is  extensively  grown.  Other 
agricultural  products  are  sugar,  tobacco,  cotton  and  rubber, 
lliere  is  very  little  manu^icturing  in  the  country. 


87S  EXPORTING  TO  THE  WORLD 


The  foreign  trade  of  Venezuela  is  rapidly  growing,  and  the 
United  States  is  leading  all  other  countries  in  the  value  of 
teports  and  exports  with  that  eonntry. 

The  following  table  shows  Venesoela's  foreign  trade  for 


eight  years : 

Year.  Imports.  BaqMMts. 

1910  $12,388,000  $17,949,000 

1911   18,395,000  22,684,000 

  f^fi^floo  fui;^ijm 

19ia   18,030,000  $9,484,000 

1914   13,987,000  21,520,000 

1915   13,470,000  23,404,000 

1916   81,388,000  85,530,000 

1917   84,593,000  84,006,000 


The  chief  port  of  Venezuela  is  La  Guayra. 
The  Guiancis 

The  Guianas  arc  British,  Dutch  and  French  Guiana. 

British  Guiana  has  an  area  of  90,277  square  miles  and  is 
situated  on  the  north  coast  of  Soi^th  America^  having  Dutch 
Guiana,  Brazil,  and  Venesuela  on  the  east,  aonth  and  west, 
respectively. 

British  Guiana's  mineral  wealth  is  derived  principally  from 
foU  which  is  washed  in  all  the  river  valleys.  Sugar  canei 
and  rice  is  grown  extensively,  and  sugar,  mm  and  molasses 
are  manufactured. 

The  inhabitants  are  chiefly  Portuguese,  negroes,  Hindu 
coolies,  and  Chinese.  The  aborigines  number  aboat  8,000. 
The  total  population  of  the  colony  is  about  350,000. 

The  area  of  French  Cruiana  is  about  30,500  square  miles. 
The  capital  and  port  is  Cayenne.  The  principal  industry  is 
the  growing  of  coffee  and  cacoa. 

Exports  from  the  principal  town  of  Dutch  Guiana  are  bal- 
ata,  sugar,  gold,  cacoa,  bananas,  ^ffee,  timber  and  rum.  Im- 
ports consist  of  manufactured  articles,  oils,  drugs,  chemicals, 
wines  and  liquors,  and  animals. 

The  area  is  46,142  square  miles  and  the  population,  con- 
sisting of  Portuguese  and  negroes,  is  about  98,000  of  whom 
less  than  1,000  are  Europeans. 


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373 


Ecuador 

The  approximate  area  of  the  republic  is  116,000  square 
miles,  including  the  Galapagos  Islands  in  the  Pacific. 

The  most  important  industry  of  the  country  is  agriculture. 
Cacoa  is  ^e  chief  product  while  rubber  is  gaining  fast.  The 
yearly  production  amounts  to  1,000,000  pounds.  The  low- 
lands of  the  country  produce  coffee,  sugar,  bananas,  cotton, 
tobacco  and  vegetable  ivory  and  in  the  upper  regions  cereals 
are  grown.  The  country  is  making  a  start  at  cattle  raising 
and  sheep  farming. 

While  Ecuador  is  known  to  be  rich  in  minerals  little  has 
been  done  to  develop  the  mining  industry. 

Ecuador's  principal  trade  is  with  the  United  States,  France 
and  Great  Britain,  and  since  the  opening  of  the  Panama  Omal 
trade  between  the  United  States  and  Ecuador  has  greatly 
increased.  Ecuador  is  in  need  of  manufactured  articles,  food- 
stuffs and  woven  goods.  In  1916  imports  from  the  United 
States  amounted  to  $5,33^71.  Guayaquil  is  the  only  im- 
portant port  of  the  cotmtry. 

The  population  of  the  country  is  estimated  at  2,000,000. 

Ecuador's  foreign  trade  for  a  period  of  eight  years  is  as 
follows: 

Vear.  Imports.  E^qwrts. 

1910  $11,489,000  $18,698,000 

1911   10,354,000  13,690,000 

1912   8,837,000  15,789,000 

1913   8,403,000        13,061,000  ' 

1914   8,408,000  18,896,000 

1915   9,330,000  17,570,000 

1916   9,346,000  17,600,000 

1917   10,196,000  16,338,000 

Peru 

Peru  is  one  of  the  richest  ooimtries  on  the  west  coast  of 
South  America,  and  presents  the  most  favorable  possibilities 
for  the  development  of  trade  with  the  United  States. 

The  area  of  Peru  is  695,733  square  miles,  and  the  popu- 
lation is  about  6,000,000  inhabitants. 

Peru  is  rich  in  forestry,  mining  and  agriculture.  The  most 
valuable  of  the  Peruvian  forests  is  rubber. 

Gold,  silver,  copper,  petroleum,  nitrates,  vanadium,  tung- 


874 


EXPORTING  TO  THE  WORLD 


stcn,  nickel,  iron,  sulphur,  borax  and  peat  furnish  the  min- 
eral wealth  of  the  country.  Among  agricoltiina  products 
sugar  and  cotton  take  the  lead. 

The  chief  manufactures  of  the  Country  are  cotton  and 
woolen  goods.  The  textile  factories  of  Peru  consume  about 
5,000,000  pounds  of  cotton  annually. 

Peru's  principal  imports  are  textiles  of  aU  kinds,  wheat, 
lumber,  cool,  ofls,  wearing  ai^>arel,  medicines  and  machinery. 

The  United  States  leads  in  exports  to  that  country,  and  the 
opportunity  for  further  increasing  our  commerce  is  growing 
better- 

Peru's  foreign  trade  for  a  period  of  years  is: 


Year.               Imports.  Exports. 

1  WO  $24,206 ,000  $34,380,000 

1911                    26,430,000  36,042,000 

1912                   24,982,000  46^17,000 

 89,591,000  44,410,000 

W14  88,404,000  42,611,000 

  15,044,000  68,638,000 

1916                    42,256,000  80,497,000 

1917                   65,712,000  90,728,000 


CaUao  is  the  principal  port  but  the  biggest  volume  of  busi- 
ness is  tnuisacted  m  Lima,  the  capital. 

The  area  of  Bolivia  is  about  708,195  square  miles,  and  popu- 
lation about  2,900,000  of  which  about  50  per  cent  are  Indians, 
25  per  cent  mixed  Spanish  and  Indian,  and  18  per  cent  white. 

The  principal  mineral  products  of  Bolivia  ate  tin,  ^ver, 
gold,  copper,  iron,  lead,  sine  cobalt,  pktinum,  antimony,  bis- 
muth, and  quicksilver. 
Bolivia's  foreign  trade  from  1910  to  1917,  inclusive,  was: 


Year.               Imports.  Exports. 

1^10  $19,088,000  189,493,000 

IMl                   22,765,000  88,226,000 

1912                    19,308,000  35,148,000 

1913                   21,357,000  36,661,000 

  16,607,000  85,668,000 

1W5                   8,804,000  87,132,000 

W16                    12,128,000  39,360,000 

1917                   13,067,000  61,622,000 


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876 


Bolivia  has  no  seaport,  and  the  only  way  to  reach  La  Paz, 

the  capital,  is  by  rail  from  MoUendo,  Peru,  or  from  Antofa- 
gasta,  Chile. 

CkiU 

Chile  is  a  promising  market  for  American  manufacturers 
and  exporters.  The  most  progressive  country  on  the  west 
coast  of  South  America  this  republic  is  rapidly  developing  its 
resources,  and  is  in  constant  need  of  manufactured  wares 
which  the  United  States  is  in  a  position  to  supply.  Chile  was 
a  fine  customer  for  British  and  German  goods  before  the 
war  broke  out,  but  when  those  sources  of  supply  were  cut  off 
she  turned  to  this  country  where  she  found  an  ample  supply 
of  merchandise  for  her  needs. 

The  area  of  Chile  is  307,620  square  miles  and  population 

5,000,000. 

The  world  famous  nitrate  deposits  in  the  northern  part  of 
Chile,  and  from  the  export  duties  on  this  product  the  repub- 
lic derives  its  principal  income. 

The  country  is  rich  in  agricultural  lands,  and  the  stock 
raising  industry  is  growing  rapidly^  As  a  manufacturing 
country,  Chile  ranks  among  the  first  countries  of  South 
America.  Her  principal  manufacturing  industries  are  flour 
milling,  tanning,  smelting,  brewing  and  distilling.  Shoes,  har- 
ness, textiles,  clothing,  furniture,  cars  and  carriages,  pottery 
and  soap  are  also  manufactured  in  the  country.  Chile,  also, 
is  one  of  the  largest  wine  growing  countries  in  the  world. 
About  80,000,000  gallons  of  wine  and  spirits  are  produced 
annually. 

Trade  with  the  United  States  has  increased  rapidly.  In 
1908  imports  from  the  United  States  amounted  to  $8,000,000 
as  compared  with  $169,000,000  in  1917. 

Chile  is  one  of  the  finest  markets  for  American  merchan- 
dise in  South  America. 

The  importance  of  the  country  in  foreign  trade  is  reflected 
in  the  following  statistics  of  her  commerce: 


Year.               Imports.  Exports. 

1910  $108,582,000  $120,022,000 

1911                  127,381,000  123,884,000 

1012                  122,076,000  139,878,000 

1913  Id0,d74,000  144^658,000 


376  EXPORTING  TO  THE  WORLD 


Year.  Imports.  ExpcMts. 

  98,461,000  109,381,000 

1915   55,922,000  119,530,000 

1916   81,220,000  187,468,000 

1917  129,603,000  269,983,000 

WIS   799,626,000 


Valparaiso  is  the  principal  port  of  Chile,  and  while  many 
importers  maintain  offices  in  this  city,  there  arc  branches  in 
Santiago,  the  capital 

Argentina 

Next  to  Brazil,  Argfcntina  is  the  largest  Republic  in  South 
America,  having  an  area  of  1,135,840  square  miles. 
The  population  is  about  7,900,000. 

The  country  derives  its  riches  from  its  agricoltnre  and 
stock  raising.  The  principal  ciops  are  wheat,  maize,  and 
linseed.  The  sugar  and  wine  industry  are  also  extensive. 
There  is  very  little  mining  in  the  country.  The  principal 
mineral  product  is  petroleum  which  has  been  discovered  in 
the  southern  part  of  the  country. 

Of  the  728,680,000  acres  in  Argentina,  268,196,000  acres  are 
snitahle  for  agriculture  or  stockraising.  In  1917  the  acreage 
and  production  of  the  four  leading  agricultural  products  were 
as  follows:  Wheat,  16,088,967  acres;  com,  8,968,861  acres;  lin- 
seed, 3,207,414  acres;  oats,  2,526,406  aciea. 

Stock  raising  is  second  in  importance  to  agriculture.  The 
country  is  one  ci  the  greatest  cattle  regions  of  the  world. 
In  1917,  meat  to  the  value  of  $132,400,000  was  exported. 
Railroad  development  in  Argentina  has  progressed  rap- 
idly. In  1918  there  were  21,858  miles  of  railway  in  operation, 
6,772  of  which  were  state  property. 

Buenos  Aires,  the  lai^  city  in  South  America,  is  the 
capital.  Argentina  is  not  a  manufacturing  region,  although 
the  industry  is  developing  and  opportunities  for  the  sale  of 
manufacturing  machinery  are  growing.  The  principal  indu»- 
trial  plants  are  sugar  factories,  wine  depots,  flour  mills,  brew- 
eries, and  neat  freezing  d^ts.  There  is  very  little  fuel  to 
be  had  for  manufacturing  purposes;  most  of  the  coal  comes 
from  Great  Britain  and  the  United  States. 

Argentina's  conunerce  for  a  period  of  nine  years  was  as 
follows: 


THE  WORLD'S  MARIQBTS 


Year.  Imports.  Exports. 

1910   351,771,000  372,626,000 

1911   366,811,000  324,697,000 

1912   364,853,000  480,391,000  ^ 

1913   421,852,000  483,504,000 

1914   271,818,000  349,254,000 

1915   220,086,000  641,532,000 

1916   226387,000  627,045,000 

1917    380,321,000  559,170,000 

1918   464,065,000  m,569,000 

BfoMa 


Brazil  is  the  largest  country  in  South  America,  and  the 
third  largest  in  the  world.  An  estimate  of  the  total  popula- 
tion in  1916  was  26,642,402,  of  which  45  per  cent  is  European, 
82  per  cent  Indian  half  breeds,  15  per  cent  negroes,  and  8  per 

cent  pure  Indians. 

The  possibilities  for  developing  trade  with  Brazil  are  un- 
limited. The  country  is  being  devdoped  rapidly.  Her  for- 
eign trade  is  flourishing.  The  total  imports  in  1917  were 
valued  at  $222,550,000  and  the  exports  at  $299,375,000. 

Brazil's  commerce  is  principally  carried  on  with  the  United 
States,  Great  Britain,  France,  Argentina,  Portugal  and  Italy. 

Bnudl's  natural  resources  are  vast.  Hor  forest  regions 
along  the  Amazon  cover  2,000,000  square  miles,  and  it  sup- 
plies several  hundred  miles  in  the  country  with  timber. 

Brazil's  mineral  wealth  is  rapidly  being  developed.  In  her 
chief  mining  regions  diamonds,  gold,  iron,  manganese,  and 
coal  are  produced  in  substantial  quantity.  Manganese  in  par- 
ticular, in  recent  3rears  has  been  mined  with  considerable  suc- 
cess. It  is  estimated  that  the  visible  deposits  of  iron  total 
2,000,000,000  tons. 

Agriculture,  however,  is  the  principal  source  of  wealth. 
Bradl  supplies  50  per  cent  of  the  world's  demand  for  rubber 
which  is  found  in  abundance  in  the  Upper  Amazon.  The 
total  annual  crop  amounts  to  more  than  forty  thousand  tons. 
Coffee  is  the  chief  product ;  4,500,000  acres  are  devoted  to  its 
culture.  The  annual  crop  is  about  12,000,000  sacks.  Cacao 
is  also  an  important  product.  Other  crops  grown  in  Brazil 
sudcessfully  are  sugar,  tolMcco,  cotton,  rice,  com,  beans 
and  mate. 


m  EXPORTING  TO  THE  WORLD 


Census  figures  for  1916  showing  that  Brazil  had  in  that 
year  nearly  29,000,000  head  of  cattle,  over  17,000,000  swine. 
7,000,000  sheep,  and  6,000,000  horses,  reflect  the  wealth  of  the 
country  in  the  stock  raising  industry. 

The  textile  industry  is  the  most  important  manufacturing 
industry.  Capital  invested  is  about  $80,000,000.  There  Is 
considerai>le  development  going  on  m  the  preparation  and 
manufacture  of  hides  and  leather.  About  20,000,000  pairs  of 
shoes  are  made  annually. 

The  foreign  commerce  of  BrazU  is  shown  in  the  fellowhig 
figures  of  imports  and  exports  for  a  period  of  nine  years: 


Year.               Imports.  Eaqknts. 

IWO  $881,292,000  $304,370,000 

IWl                  257,163,000  325,272,000 

1913                  307,934,000  362,796,000 

1913  826,100,000  813,628,000 

1W4  172,223,000  221,639,000 

1915                  140,082,000  255,659,000 

1916                 196,998,000  266,802,000 

1»1^^                 209,484,000  284,114,000 

  247,352,000  284,276,000 


The  principal  cities  of  Brazil  are  Rio  de  Janiero,  Sao  Paulo, 
an  d  Bahia. 

Paraguay 

With  the  exception  of  Uruguay,  Paraguay  is  the  smaUest 
of  the  South  Ameriean  republics,  having  a  total  area  of 
171,815  square  miles.  Yet  it  is  larger  in  area  than  the  state 
of  Arizona  and  Alabama  combined.  While  it  is  the  most 
backward  country  m  South  America,  it  has,  nevertheless, 
wonderful  possibilities  for  development.  At  present 
tobacco,  cotton,  and  mate  are  grown  extensively.  Stock 
raising  is  growing  in  importance.  Piraguay's  commerce  is 
improvmg.  Its  principal  exports  are  hides,  quebracho  extract, 
mate,  hardwoods,  and  tobacco. 

The  principal  city  is  Asuncion. 

The  population  of  Paraguay  is  about  800,000. 

The  following  table  shows  the  extent  of  its  foreign  trade : 


THE  WORLD'S  MARKETS 


379 


Year.  Imports.  Exerts. 

IWO   $6,017,000  $4,769,000 

Mil   6,494,000  6,593,000 

1912   5,190,000  4,109,000 

1913    7,876,000  5,402,000 

1914   4,996,000  4,447,000 

19U   8,834,000  8,624,000 

1816    4,492,000  4,667,000 

1917   4,667,000  11,237,000 

Uruguay 


Uraguay  is  the  smallest  republic  in  South  America,  contain- 
ing only  72,210  square  miles.  The  country  is  about  the  size 
of  North  Dakota.  It  enjoys  a  mild  and  healthful  cHmate 
which  attracts  thousands  of  people  annually.  Its  population 
according  to  the  latest  census,  was  1,378,000,  or  a  population 
of  about  19.1  persons  per  square  mile.  Italians,  Spaniards, 
Brazilians,  Argentinos,  French,  Swiss,  English,  and  Germans 
predominate.  There  are  very  few  Americans  in  the  country. 
Montevideo  with  a  population  of  376,000  is  the  largest  city, 
and  the  capital. 

Cattle  raising  is  a  very  important  industry  in  Uruguay. 
American  interests  have  established  packing  plants  in  the 
country  and  this  has  given  considerable  encouragement  to 
Ae  raising  of  cattle.  Uruguay's  vast  grazing  territory  also 
is  an  advantage  in  the  development  of  this  industry.  Sheep 
raising  is  also  important.  There  are  about  25,000,000  sheep 
in  the  country. 

The  government  is  lending  considerable  assistance  to  the 
agricultural  interests.  Agricultural  colleges  with  experimental 
stations  similar  to  those  conducted  in  the  United  States  have 
been  established.  The  principal  crops  are  wheat,  oats,  lin- 
seed, and  barley. 

Uruguay's  foreign  commerce  is  gradually  growing.  The 
country  serves  as  a  good  market  for  coal,  foodstuffs,  machin- 
ery, office  appliances,  etc.  The  following  table  on  her  foreign 
commerce  indicates  the  country's  growing  importance: 


Year.  Imports.  Expjprts. 

1910  $46,590,000  $44,200,000 

1911   51,355,000  50,753,000 

1812  60,^,000  66448,000 


t 


380  EXPORTING  TO  THE  WORLD 

Exports. 
89;M)1,000 
59403,000 
73,300,000 
71,050,000 
96;B17,000 

The  Near  East 

Owing  to  changed  conditions  in  Europe  there  has  been 
some  confusion  as  to  geographical  boundaries  in  that  conti- 
nent Nations  have  been  dismembered;  new  states  have  hpm 
created  and  boondary  lines  have  been  redrawn.  It  is  there- 
fore necessary  to  make  a  study  of  the  modern  geography  of 
Europe  in  order  that  the  reader  may  get  his  bearings. 

The  Near  East,  also  known  as  the  Levant,  has  perhi^ 
suffered  as  many  changes  at  the  hands  of  the  map  makers 
as  any  other  region  in  the  old  world  as  the  result  of  the  Great 
War.  According  to  the  Department  of  Commerce  the  Near 
East  is  understood  to  mean  the  Balkan  States,  Turkey  in 
Asia,  and  Egjrpt,  as  well  as  Arabia  and  Persia,  and  parts  of 
Armenia. 

The  Balkans  include  the  following  states: 

Roumania,  Bulgaria,  Servia,  a  part  of  Croatia-Slavonia,  Bos- 
nia and  Herzegovina,  Dalmatia,  Montenegro,  Albania,  Greece, 
and  the  remnants  of  European  Turkey. 

The  Balkan  Peninsula  includes  all  the  above  named  rc^^ions 
with  the  escception  of  Roumania. 

Since  the  end  of  the  war,  and  the  subsequent  opening  of 
these  countries  to  foreign  commerce  great  markets  for  Ameri- 
can wares  have  been  revealed.  The  majority  of  these  r^ons 
need  foodstuffs,  doth,  clothing,  electrical  plants  and  mate- 
rials, farming  products,  agricultural  madhmery  and  imple- 
ments, motor  transportation,  railway  material  and  rolling 
stock,  and  bridge  construction  materials.  Countries  like 
Greece,  Roumania  and  Turkey  have  been  large  purchasers  of 
American  goods  in  the  past,  and  latest  reports  from  that 
r^on  are  very  encouraging.  As  soon  as  conditkms  are  set- 
tled in  the  new  states  the  United  States  may  rest  assured  of  a 
substantial  share  of  the  trade  from  that  part  of  the  world. 


Year.  Imports. 

1913   50,501,000 

1W4   87,879,000 

1015   35,000,000 

1916   35,155,000 

1917  38,700^)00 


THE  WORLD'S  MARKETS 


881 


The  Far  East 

The  Far  East  includes  Japan,  Chosen,  Formosa ;  the  Philip- 
pine Islands;  China,  Manchuria,  Mongolia,  Tibet,  Hong 
Kong;  Siberia;  French  Indo-China;  Siam;  the  Malay  Penin- 
sola;  India,  Btirma,  Ceylon,  Afghanistan  and  Baluchistan; 
and  the  Dutch  East  Indies,  including  Java,  Sumatra,  Celebes, 
Borneo,  and  New  Guinea. 

America's  business  with  the  Far  East  has  been  making 
rapid  strides.  Our  total  sales  for  1914  were  $113,425,616  while 
in  191S  they  were  increased  to  $458,937,775.  Japan  is  one  of  our 
best  customers  in  that  region.  With  the  betterment  of  trans- 
portation facilities  the  Far  East  should  develop  into  one  of 
America's  finest  maricets. 

In  1918  we  exported  goods  to  Japan  valued  at  nearly  $274,- 
000,000  while  our  imports  were  over  $300,000,000. 

Our  exports  to  China  in  1918  were  over  $52,000/)00  while 
our  imports  were  nearly  $111,000,000. 

A  great  potential  market  for  American  wares  lies  in  India, 
containing  a  population  of  over  300,000,000  people.  Tarift 
duties  present  no  obstacle  to  any  country.  India  needs  cot- 
ton piece  goods,  automobiles,  electrical  apparatus,  and  hard- 
ware in  general,  grains,  rugs,  dyes,  typewriters,  oils,  tools, 
explosives,  glassware,  etc. 

Ceylon  is  a  good  market  for  cotton  goods,  automobiles,  k«r- 
osine,  haberdashery,  leather  goods,  sewing  machines,  type- 
writers, hardware  and  textiles. 

Colombo  is  the  principal  city  and  ranks  seventh  in  tonnage 
among  all  ports. 

A  comparative  table  of  foreign  trade  statistics  showing  the 
commerce  of  the  United  States  with  principal  regions  of  the 
Far  East  gives  an  idea  of  the  importance  of  those  markets. 
The  following  tables  disclose  the  magnitude  of  trade  with 
the  Far  East  for  a  period  of  yearsi 


Japan 


Exports. 

Imports. 

1913 

$61,204,180 

$92,236,691 

1914 

48,385,538 

98,269,504 

1916 

101,733,000 

169,126,000 

1917 

186,340,304 

863,669,709 

1918 

273,819,586 

301,919,771 

301  EXPORTING  TO  THE  WORLD 


Exports. 

Imports. 

$85,384,793 

$21,010,248 

1914 

87,304,275 

18,162,312 

1916 

88^8,678 

86,648433 

1917 

88440488 

68,384,641 

1918 

58,976,178 

85,935,220 

21,326,834 

39,010,800 

1914 

24,698,734 

39,382,978 

1916 

86431,469 

71,666,046 

1917 

40;B98,059 

186406,080 

1918 

68,570,579 

110,970,969 

15,108,956 

116,220,591 

1914 
1916 

15,625,195 

111,903,527 

88^7,000 

68,609,000 

1917 

86,000,000 

101,067,067 

Stfiits  Scttletngnte 

...1918 

8,606,901 

85,718,185 

1914 

4,184,674 

26,307,860 

1916 

4,585,231 

82,114,598 

1917 

7,734,439 

187,668,633 

...1918 

8461,698 

6,881,964 

1914 

8,676,896 

6,334,361 

1916 

7,401,026 

27,716,589 

1917 

81,139,305 

62,011,236 

485,058 

116,666 

1914 

886370 

146^ 

1916 

774,956 

837,250 

1917 

1,051,586 

149,162 

The  Commonzveidth 
of  Australia 


Lying  to  the  southeast  of  the  continent  of  Asia  is  the  G>ni- 
monwealth  of  Atistralia,  comprising  tlie  states  of  New  South 
Wales,  Queensland,  South  Australia.  Victoria,  Western  Aus- 
tralia, and  two  territories,  the  northern  territory  and  certain 
possessions  in  the  South  Sea  Islands.  The  total  area  of 
Australia  proper  is  8,946,691  square  miles;  of  the  ''Commoii- 
wealth"  8,974,681  square  miles. 

Australia  is  rich  in  a  variety  of  industries.  Not  only  is  it 
a  great  sheep  and  cattle  country  but  it  produces  minerals 
such  as  gold,  coal,  silver,  copper  and  iron,  in  great  quantities. 
As  a  tnanufacturing  country  Australia  is  developing  rapidly 


THE  WORLD'S  MARKETS 


383 


owing  to  the  liberal  policy  of  the  Commonwealth  government 
to  encourage  local  industries  by  means  of  protected  duties 
and  the  payment  of  bounties.  New  Soutii  Wales  and  Victoria 
are  the  leading  manufacturing  states. 

The  following  table  of  imports  and  exports  indicate  the  im- 
portance of  the  Commonwealth's  foreign  commerce; 


Year.  Imports.  Exfbrts. 

1910  $280,027,000  $347,576,000 

1911   312,470,000  370,864,000 

1912..   364,688,000  369,062,000 

1W3   SnMfijm  366,616,000 

1914   185,60®,000  176,982,000 

1915   300,639,000  282,725,000 

1916   361,713,000  348,916,000 

1917   355,683,000  457,060,000 

1918   888,796,000  350,114,000 


New  Zealand  is  1,200  miles  southeast  of  Australia.  The 
total  area  is  104,751  square  miles.  It  consists  of  two  long, 
narrow  main  islands  separated  by  Cook  Strait.  The  popu- 
hitiott  is  about  1,000,000,  98  per  cent  of  which  are  of  British 
burth.  The  principal  cities  of  New  Zealand  are  Auckland, 
Wellington,  Christ  Church,  and  Bunedin.  New  Zealand  as 
a  market  for  American  wares  is  a  fertile  one.  Its  foreign 
trade  is  reflected  in  the  following  figures: 


Year.  Imports.  Expl^rts. 

1910  $75,179,000  $93,590,000 

1911  ; .    92,871 ,000  106,649,000 

1912   94,993,000  90,280,000 

1913   101,946,000  103,384,000 

1914   108,321,000  110,728,000 

1915   105,221,000  136,286,000 

1916   104,608,000  150,845,000 

1917   128,180,000  161,991,000 

1918  101304,000  163,769,000 


Africa  as  a  Market 
for  American  Goods 

Africa  is  little  known  to  the  average  American  trader.  We 
have  paud  hot  little  attention  to  this  part  of  the  world.  We  speak, 
of  course,  of  the  South  African  Union  with  a  great  white  pop- 


984  EXPORTING  TO  THE  WORLD 


ulation.  The  Transvaal  with  its  rich  mines  furnishes  the  wealth 
of  that  region  and  upon  these  riches  depends  the  prosperity  of 
the  Union. 

While  the  populatiofi  of  this  aectkm  oi  Africa  is  growiii|^ 
akmly  neverthekit  h  has  splendid  prospects  and  American  man- 

nlacttirers  and  exporters  are  making  creditable  gains  in  the 
establishment  of  a  permanent  trade  with  the  merchants  of  that 
r^ion. 

The  area  of  the  Union  of  South  Africa  is  473^00  square  miles 
which  figures  illustrate  the  immensity  of  the  coontiy.  It  is  nearly 
as  laise  as  Alaska.  Its  popnlatkin  is  orar  7»000,000. 

O^  coimtries  In  Alrka  sodi  as  Morocca  Algeria,  Tunis  and 
Tripdi  have  not  yet  reached  Aat  commercial  position  where  they 
demand  serious  attention  for  big  business. 

During  the  years  1917  and  1918  the  exports  of  the  United 
States  to  Africa  which  in  this  Instance  includes  Egypt  and 
other  colonies  oi  Enropean  coontries  were  valued  at  $61^,- 
<m  and  $59499^19,  respectively.  The  exports  to  the  Union 
of  South  Africa  in  1917  totaled  $39,084,607  as  compared  with 
$43,760,697  in  1918. 

While  we  have  included  Egypt  in  the  diviskm  called  the 
Near  East  it  nmf  be  proper  to  give  passn^  notice  to  that 
country  In  speaking  about  Afnca  owing  to  the  fact  that  next 
to  the  Union  of  South  Africa  it  is  the  most  important  coun- 
try in  that  continent  from  the  standpoint  of  its  potential  poa> 
sibilities  for  American  wares.  Egypt  has  several  trade  cen- 
ters k  whidi  businesa  can  be  devetoped.  Thero  aro  no  exact- 
ing tiade  laws  to  hinder  conuneroe  as  the  country  is  under 
British  control. 

Ema^ 

Europe  has  been  America's  greatest  customer.  Althoei^ 
composed  of  great  mamifacruring  nations^  Europe  before  tlie 
war  bougbt  tremendous  quantities  oi  American-made  goods,  as 

statistics  furnished  by  the  Bureau  of  Foreign  and  Domestic 
Commerce  indicate.  The  records  of  manufactured  articles  sold 
to  Europe  for  12  years  is  as  follows:  1900,  $145,000,000;  1901, 

$135,000,000;  1902,  $130,000,000 ;1904,|tia7.000,00a;  1906, $185r 
CWO,000;  1906,  $151,000^;  1907,  |16ff4KN),000;  1908,  $178,000,* 
000;  1909,  $16(VO0O,00O;  1910,  $168,000,000;  1911,  $186,000,000; 

1912,  $206,000,000. 

Before  the  war  we  sold  to  Germany  manufactured  articles  that 


-x,:."i»«.. 


THE  WORLD'S  MARKETS  m 


she  could  manufacture  cheaper  in  her  own  factories.  England 
has  been  a  great  buyer  of  American  manufactured  articles.  Some 
of  the  purchases  by  some  of  the  countries  of  Europe  of  certain 
manufactured  articles  such  as  sewing  machines,  watches,  ctc^ 
have  been  greater  than  the  purchases  of  aU  the  countries  of 
Soatli  America  put  together.  France,  the  country  in  which 
the  automobile  originated,  purchased  more  automobiles  from 
the  United  States  before  the  war  than  our  neighbor,  Mexico. 
Other  nations  will  become  big  buyers  as  their  needs  in  this 
reconstruction  period  justify— and  their  needs  are  great 

It  is  needless  to  glo  into  d^il  as  to  the  market  require- 
ment of  each  individual  country  in  Europe.  It  is  enough  to 
say  that  practically  every  nation  in  that  continent  is  a  poten- 
tial field  for  increased  business  with  the  United  States.  The 
foUowmg  table  of  exports  and  imports  with  the  principal 
countries  of  Europe  r^ects  the  importance  of  that  field: 

Imports  from— 

Principal  Countries.  I9i8.  1917. 

Austria-Hungary   97,823  64,937 

Belgium   168,022 

^""CC    69,509,742  98,G39,653 

Germany    317,706  159,352 

^^^^y    24,340,022  36,480,807 

Netherlands    8,824,419  22,744,504 

  2,015,851  6,280,233 

Russia  in  Europe   6,784,603  12,350,179 

Spain    18,488,289  36,881,630 

Sweden    5,935,490  18,069,487 

Switzerland   16,882,854  19,834,668 

United  Kingdom                        148,614,816  280,080475 

Exports  to^ 

Principal  Countries.                          1918.  1917. 

Austria-Hungary  

Belgium                                        154,649,338  56,080,886 

Denmark                                      11,353,845  32,408^30 

France                                       931,199,774  940,791,381 

^^^fvamy     2,275 


386  EXPORTING  TO  THE  WORLD 


Princtpal  Countries.  1918.  1917. 

Greece                                           4,346,471  8,636,163 

Italy                                              492,145,797  419,034,43*3 

Netherlands   *           11,369,269  57,540,570 

Norway                                       36^37,464  62^47^57 

Russia  in  Europe                           8,902,449  816,250,020 

Spain                                             69,188,733  91,584,080 

Sweden                                            15,674,108  20,467,923 

United  Kingdom  2^61^00»680  2,008,669,641 

Cmiaia 

We  r^rd  Canada  as  a  domestic  rather  than  as  a 
foreign  field.  Canada  is  growing  in  importance  as  a  mar- 
ket for  American  goods.   Her  trade  practices  are  similar  to 

ours  and  there  is  no  difficulty  in  establishing  relations  with 
the  business  men  of  the  Dominion.  We  sold  goods  to  the 
¥alue  of  over  $800,000,000  in  1917  to  Canada.  In  1918  the 
total  value  was  $886/ 


CHAPTER  XXIII 


FOREIGN  TRADEMARK  REQUIREMENTS 

American  manufacturers  who  have  seriously  committed  them- 
selves to  the  policy  of  developing  business  for  their  products  in 
foreign  countries  on  a  permanent  basis,  should  not  neglect  the 
matter  of  roistering  their  trademarks  in  the  markets  where  such 
procedure  may  be  deemed  justifiable.  Unless  this  precaution  is 
tajsHfTniany  of  our  eaqwrting  manufacturers  will  someday  wake 
up  to  tiie  fact  that  before  they  are  able  to  do  business  in  certain 
foreign  countries  they  must  dicker  for  the  privilege  with  certain 
persons  in  those  countries  commonly  known  as  ''trademark 
pirates"  who,  taking  advantage  of  the  thoughtlessness  of  our 
American  business  men,  r^^istered  these  valuable  trademarks 
in  their  own  name. 

In  order  to  protect  himself  from  these  "pirates"  the  first  thing 
an  American  manufacturer  should  do  before  beginning  busi- 
ness in  a  foreign  country  is  to  register  his  trademark.  This 
should  be  done  even  before  app<unting  an  agent  or  a  repre- 
sentative, for  the  very  simple  reason  that  agents  or  repre- 
sentatives are  sometimes  known  to  register  trademarks  in 
their  own  names,  and  thereby  deprive  the  American  principal 
of  his  property  rights.  Neither  should  our  American  manu- 
facturer depend  on  foreign  agencies  to  handle  this  trademark 
matter.  They,  also,  are  sometimes  known  to  raster  trade- 
marks in  their  own  name.  The  safest  plan  is  to  fiind  a  solicitor 
of  patents  and  trademarks  in  the  United  States — there  are 
many  of  these  officials  in  this  country,  who  have  facilities  for 
registering  trademarks  in  foreign  countries  through  reliable 
and  competent  associates.^ 

1  Since  it  is  not  feasible  in  any  Latin  American  country,  any  more  than  it  is  in 
the  United  States,  for  any  one  not  a  trained  specialist  to  attempt  to  secure  hit 
own  patent  or  registered  trade  mark,  any  publication  attempting  to  give  directions 
•s  to  the  methods  of  aeettriiig  patents  and  trade-marks  would  serve  no  adequate 
murpote  and  would  be,  in  a  grut  majority  of  caaes,  misleading  in  the  highest  degree 
No  manufacturer  in  the  Umted  States  would  for  an  instant  consider  a  proposition 
of  securing  a  patent  or  trade-mark  except  through  regular  patent  and  fntdf-fwiirk 
solicitors.    The  identical  procedure  is  necessary  in  Latin  America. 

If  the  owner  of  an  United  States  trade-mark  (already  r^ristered  in  the  United 
States  Patent  Office)  wishes  to  secure  protection  under  the  laws  of  the  Latin 
American  countries,  this  trade-mark  must  be  filed  in  the  proper  office  of  the 
c«>untrjr  wherein  registration  is  desired.  The  registration  offices  of  the  several 
countries  are  called  by  different  names.   In  order  to  register  the  U.  S.  or  anjr  other 

887 


388 


EXPORTING  TO  THE  WORLD 


Dmggrs  RamUmg 
From  Tkit  Neglect 

The  dangers  resttltiiig  from  the  failtire  to  register  tnide- 
iiiaiks  in  loiejgii  countries  where  ma  Americsn  manoiactarer 
My  have  a  potential  market  for  his  goods  may  be  seen  from  a 
recent  exposure  of  a  wholesale  effort  on  the  part  of  a  Portu- 
guese to  corner  a  large  number  of  trademarks  belonging  to 
American  manufacturers  in  Eurtc^ean  cowitriei  and  South 
America.  By  taking  advantage  ci  international  trademark 
and  patent  laws,  and  filing  a  few  papers  in  Portugal  at  the 
cost  of  a  few  hundred  dollars  this  Portuguese  is  said  to  have 
obtained  control  of  the  principal  markets  of  continental  Em:- 
ope  and  South  America  for  American  automobiles  and  tract- 
ors. R^iisterittg  these  trademarks  in  his  own  name  in  Portu- 
gal this  man  was  within  his  rights  under  the  Berne  Trademark 
Convention  to  extend  the  control  of  these  trademarks  to  the 
twelve  other  countries  parties  to  the  convention,  unless  the 
American  owner  had  previously  obtained  r^;istration  in  those 
GountrMs. 

In  the  countries  where  this  man  obtained  tihc  trademarks  he' is 
the  only  man  entitled  to  sell  these  cars  or  tractors.  He  has  the 
legal  right  to  have  confiscated  in  his  favor  all  cars  bearing  those 
trademarks  which  are  shipped  to  those  countries.  This  places 
him  in  a  position  where  he  can  lofce  tfie  manu^Kturers  of  tfiese 
cars  to  make  him  tibeir  agent  on  his  own  ifllMI^  to  stop  doing 
business  there.  It  cost  this  man  only  $20  to  procure  the  registra- 
tion of  each  trademark  at  Berne  after  he  obtained  registration 

foreign  trade-mark,  it  it  usual  for  a  power  of  attorney  for  that  purpose,  (certified 
by  the  consular  representative  oi  the  country  where  it  is  desired  to  register  the 
trade«iark),  to  be  sent  to  some  person  residing  in  tfie  city  where  the  registrmtioB 
WDce  IS  situated.  /.  certified  copy  of  the  trade-mark  as  issued  by  the  United  States 
Patent  Office,  vised  by  the  consul,  must  also  be  sent.  In  addition,  it  is  aJvisable 
to  send  at  least  a  dozen  copies  of  the  trade-mark,  the  ordinary  printed  copies  used 
by  the  Patent  Office  being  sufficient.  An  application  for  the  registering  of  the 
trade-mark  is  then  made  out  in  Spanish  (Portuguese  if  in  Brazil,  French  if  in 
Haiti)  signed  by  the  person  holding  the  power  of  attorney,  and  filed  in  the  regis* 
tration  office,  together  with  the  power  of  attorney,  the  certified  copy  of  the  trade- 
mark, and  some  of  the  plain  copies  with  certified  translation  into  Spanish.  In  due 
course  of  time  the  Office  will  issue  a  certificate  certifying  the  registering  of  the 
trade-mark  in  that  office.  The  foreign  trade-mark  is  given  the  HHM  yrffttftitHI  and 
enjoys  the  same  advantages  as  the  trade-mark  of  the  country. 

Filing  a  trade-mark  grants  exchisive  right  to  oae  of  die  same,  and  both  criminal 
aad  civil  proceedings  may  be  instituted  against  a  person  infringing  that  right. 

^  Each  country  of  Latin  America  has  special  laws  and  regulations  concerning  the 
registering  of  trade-maifcs.    la  gcaeral,  however,  they  correspond  to  those  abore. 

In  law  it  is  not  necessary  that  the  filing  of  the  application  be  done  bjr  a  lawyer 
as  any  one  has  a  right  to  apply  for  a  registration  of  a  trade-mark,  but  m  practice 
a  patent  and  trade-mark  solicitor  is  always  employed  and  this  practice  is  strongly 
recommended.  The  names  of  suitable  persons  can  be  obtained  from  the  United 
States  Consuls  in  each  country.  There  are  also  firms  in  the  larger  cities  of  the 
United  States  who  make  a  momaahsi  of  this    fu»*a— ««— ^  Kw  the  Paa«AflMBriean 


FOREIGN  TRADEMARK  REQUIREMENTS  m 


in  Portugal.  By  reason  of  the  fact  that  the  United  States  is  not  a 
party  to  the  Berne  Convention,  it  is  necessary  for  manufactur- 
ers to  procure  registratk»  teparatcly  in  cadi  eomitry  ia  which 
ibity  wiih  to  do  Htirinttt, 

In  speaking  of  the  dangers  of  trademark  piracy  in  foreign 
countries,  Mr.  Albert  E.  Parker,  New  York  patent  lawyer,  who 
discovered  the  pk>t  just  mentioned  made  the  following  state- 
ment: 

The  most  sifliister  and  difficult  problem  which  American  ex- 
porters are  constantly  having  to  face  is  the  policy,  which  has  so 
enormously  increased  in  recent  years,  of  the  pirating  by  for- 
cjgneis  of  well-known  American  trademarks.  Anierican  manufao- 
turerSy  wbSkt  ooaoqiiatnttd  with  the  ajslem  under  which  trade- 
marks are  protected  abroad,  due  to  tiie  fair  and  equitable  ar- 
rangement common  in  the  United  States,  whereby  a  trade- 
mark becomes  the  property  of  a  manufacturer  by  actual  use 
upon  the  goods  themselves,  are  so  frequently  meeting  with 
handicaps  in  the  development  of  then*  trade  abroad  that  it 
becomes  important  to  keep  before  tiie  American  exporter  llie 
exact  situation  in  connection  with  the  protection  of  his  trade- 
marks and  commerce  in  foreign  countries. 

"In  practically  all  Latin  countries,  the  registration  of  trade- 
maris  is  the  only  way  ia  which  an  American  trader  can 
acquire  property  rights  in  his  brand  or  trademark 
and  it  is  the  common  experience  of  those  who  are  handling 
the  goods  of  American  manufacturers  in  foreign  markets 
to  find  that  the  trade  in  a  certain  country  is  barred  by  reason 
of  the  unauthorised  registration  of  the  manufacturer's  trade- 
mark by  what  are  commonly  classed  as  trade-mark  pirates. 

Tatin-American  lawyers  and  commercial  firms  resent  the 
suggestion  that  the  practice  of  registering  American  trade- 
marks in  the  name  of  a  native  of  the  country  is  rightly  de- 
scribed as  an  act  of  commercial  piracy,  as  in  many,  cases  the 
Latin  agent,  knowing  fnll  well  the  laxiQr  <^  American  manu- 
faeturers  in  sodi  matters,  frequently  files  an  apptodon  to 
register  the  trademark  in  his  own  name,  avowedly  for  the  pro- 
tection of  the  trade  which  he  hopes  and.  expects  to  build  up 
under  that  brand  or  trademark. 

^nlortanaldy,  many  sock  refi^tratbns,  while  at  the  outset 
eflfeeted  in  good  faith,  are  used  by  the  agent  abroad  for 
securing  better  terms  from  the  American  manufacturer  in  case 


390  EXPORTING  TO  THE  WORLD 


of  a  ^sputt  betiroefi  tiie  paitieft,  and  in  many  instances  tiie 
agent  refuses  to  assign  the  registration  when  the  manufacturer 
or  export  house,  through  the  development  of  its  business  or 
from  other  conditions,  desires  to  change  its  agen^  relations 
abroad* 

"The  situation  in  Bnal  is  extremely  difBcnlt  for  the  Ameri- 
can manufacturers  in  that  while  it  allows  American  traders  to 
register  their  marks  at  the  Junta  Commercial  in  Rio,  such  a 
registration  does  not  prevent  a  Brazilian  tnuier  fiom  himself 
nifistering  the  same  trademark  in  the  separate  states,  twenty 
in  number,  forming  the  Republic  of  Brazil,  and  a  mark  so  regis- 
tered by  the  Brazilian  trader  can  be  used  on  the  same  or  similar 
goods  for  which  the  American  owner  of  the  mark  has  obtained 
registration,  and  this  without  any  possibility  of  redress. 

"The  situation  in  the  Argentine  Rq>ublac  has  been  acute  in 
these  matters  for  many  years  past  and  without  exaggeration 
it  can  be  stated  that  many  hundreds  of  well-known  American 
trademarks  have  been  wrongfully  registered  in  the  Argen- 
tine and  large  sums  have  been  paid  to  Argentine  cittaens 
lor  the  recovery  of  the  right  to  nse  trade  maika  po  ttffiatmd. 
One  of  the  leading  export  houses  in  New  York  recently  re- 
ported that  it  had  paid  large  sums  to  two  Argentine  traders 
for  the  right  to  export  the  goods  of  one  of  its  clients  to  that 
country. 

"Govenmient  departments  and  oonsnhur  r^retentattves  abroad 
are  constantiy  urging  on  American  traders  the  need  for  taking 
the  simple  and  safe  course,  which  in  the  end  is  also  the  econo- 
mical course,  of  registering  their  trademarks  abroad  before 
actually  beginning  trading  operations  in  foreign  countries.  The 
small  outlay  involved  in  so  registering,  seeing  that  a  registra- 
tion, once  ^ected,  extends  for  a  period  of  from  ten  to  fifteen 
years  or  more,  is  trivial  compared  with  die  amount  which 
might  be,  and  frequently  is  demanded  for  the  assignment  of 
rights  in  a  single  country  by  a  pirate  who  has  registered  the 
American  trademark. 

''A  step  forward  has  beoi  taken  through  the  passage  of  a  new 
trademark  measnre  in  Great  Britain  which  provides  that  any 
trademark  which  has  been  actually  used  in  trading  operations 
in  Great  Britain  for  a  period  of  two  years  may  be  registered 
by  the  user  thereof,  and  this,  no  matter  what  may  be  the  nature 
fd  the  mark.  Thus^  geographical  terms,  surnames,  and  even 


FOREIGN  TRADEMARK  REQUIREMENTS  391 


descriptive  words,  if  bona  fide  used  as  trademarks  by  the 

manufacturer  for  a  period  of  two  years  may  be  registered. 

*This  will  entitle  British  manufacturers  to  extend  their  regis- 
trations abroad  in  those  countries  where  a  certified  copy  of  the 
home  registration  is  demanded,  and  some  l^^lation  of  this 
character  is  sorely  needed  in  tiie  United  Suites,  to  enable  Ameri- 
can manufacturers  to  obtain  similar  advantages  abroad.  Many 
well-known  American  trademarks  are  debarred  registration 
at  the  United  States  Patent  Office  under  the  present  trade- 
mark law  by  reason  of  the  nature  of  the  trademarks,  bnt 
they  could  readily  be  registered  and  protected  under  the  laws  of 
the  foreign  countries ;  and  foreign  trademark  pirates,  knowing 
the  disadvantage  in  which  American  manufacturers  are  placed 
by  the  above  situation,  are  constantly  registering  such  trade- 
marks in  their  own  names,  to  the  serious  detriment  of  the 
American  trader  and  with  the  express  object  of  obtaining  sub- 
stantial payments  from  the  rightful  owner  of  the  trademarks 
in  diis  country." 

Trademark  regulations 

Vary  in  all  countries 

The  American  manufacturer  takes  little  trouble  in  endeavor- 
ing to  obtain  information  regarding  the  r^;istratioa  of  his  trade- 
mark in  foreign  countries.  To  him,  a  little  matter  like  raster- 

ing  his  mark  overseas  is  of  little  consequence.  Perhaps,  he  isn't 
thinking  about  venturing  into  foreign  countries  to  sell  his  wares. 
Why,  then,  should  he  take  the  trouble  of  protecting  the  mark  for 
which  he  has  probably  wgitxA  tiiousands  of  dollars  to  devebp  and 
to  advertise  at  home?  It  is  because  he  b  not  interested.  In 
spite  of  all  that  has  been  said  and  written  about  the  necessity 
of  registering  trademarks  in  overseas  markets,  the  American 
manufacturer  has  been  negligent,  and  the  foreign  trade  pirate 
has  been  profiting  as  the  result  of  this  negligence.  The  matter  of 
registering  trademarks  is  not  as  complicated  as  it  might  seem. 
It  is  possible  to  obtain  ample  protection  in  practically  every 
country  where  it  is  desirable  to  develop  a  market,  if  the  manu- 
facturer will  only  take  the  trouble  to  do  it. 

The  countries  of  the  world  in  which  trademarks  may  be  regis- 
tered may  be  divided  into  two  groups— the  commcmrlaw 
group  and  the  code-law  group. 


m  EXPORTING  TO  THE  WORLD 


The  common-law  gnmp  compmcs  tlioie  coantries  in  which 
ownership  of  tfademtrics  is  based  on  the  common-law  property 
m  trademarks;  that  is,  a  trademark  is  protected  under 
the  common  law  whether  or  not  the  mark  haa  been  registerad. 
In  this  group  may  be  included  such  nations  as  Great  Britain 
tlie  colonies*  and  the  United  States,  etc. 
^  ITie  code-law  group  comprises  those  countries  where  property 
nghts  m  trademarks  are  acquired  under  statutes  alone,  and 
only  upon  complying  with  the  provisions  of  the  statute. 
Under  this  code  are  embraced  moat  Emopean  or  Latin  Ameri- 
can cottntries. 


Rfqmrementsim 

Code'in4aw  Countries 


Intiie  code-law  coantries  tndemafk  registration  is  necessary 
m  ofdcr  to  acqmre  the  cxdnsire  rigrhts  to  its  use  in  those 
coantries.  If  the  owner  of  the  trademark  does  not  take  the 
trouble  to  register  it  any  oUier  person  may  do  so,  and  acquire 
the  exclusive  right  to  use  it  notwithstand^g  the  fact  that  file 
real  owner  may  have  used  the  mark  for  many  years. 

l^theoiy  of  the  trademark  in  these  code-law  countries  is 
aomradiat  different  tiian  in  the  United  States  where  a  person 
most  make  use  of  it  before  making  a  registration.  In  the  code- 
law  countries,  however,  the  theory  is  reversed  RcgistiatKMi 


jurisdiction  of  the  Czechos  ovale  State.    Three  rnniiianf  ift    i    I  P'^y^yO" 
il  ^^ich^should^be  certified  by  the^c^-i^  of 

ifth*^!?^i..**K****  •PP>««»**«>         appHcants  whose  trade  Lrka  wSe 
S^2SjI^#*rt.l  ^^^^'""vS'?  in  fo'-mer  Austria-Ilangary,  oatoid7%f 

tefTitpnr  of  the  Ciechoslovak  Republic,  thoold  addttionftlly  attach  a  M«rtliL2i 
abstract  from  the  trade-mark  regUlKr  Hm  «BpM  |MVkNr«m  SS^Sa^JF^S 
the  10  years'  period  of  protection.  wnu  WW  M  MOCtCd  from 

Trade-marks  of  aliens  which  had  been  reffistefcd  obIt  with        Vt^n^  ru^^u 
of  Commerce  or  ogjjr  with  the  BodapSTchaSbeTTf  Commerce ^11  brS?ot^^.d^iJ 
ferjJiorijf^ ^  i«ri«Mction  of  the  Czechoslovak  Rlp^ubirwith^tfi 

.«bie^crtrti;J%i»tSrpa'^^^^^^^^  ^Je^^or^^^Si 
Ihl  lJ!fl^ll'A  °'        ^*PJ?'^"*'  «  P«~?»»  who  hive  lJerJ?lr?It*ser;":  to 

2  SuJlJ  ^  J!Llffi!lSyj.  ^  ^5*7"'  ancf  coat,  of  aniJ 

SLM^LJSb*£?^^*'^u!       naedals,  can  be  registered  only  if  on  the  basuS 

^A^rSSSrS^  1?,*  ^^c"*^  'P**^'?'  "V^*"***  been  established. 

rt  ^  person  who  has  not  a  fixed  residence  in  the  territory  of  the  CzechniSaMW 
Republic  can  file  an  application  if  the  laws  of  his  home  gu?i  cSrtend  5h?  siS 
privileges  to  the  subjects  of^  Czechoslovakia,  provided  also  he  ap^nts  a  SuW 
authonxed  represenutive  in  the  CxechotlovalT  Kepablic.     The  period  of  nrolecHnn 

SriSbSS?^  hjS^r^'^  I?*  FR""^  newTrade-marks  ?nd  of  thos^'L^rread? 

«opaer  Austna-Hunmry  had  been  presented  for  recording  in  the  centnS 


FOREIGN  TRADEMARK  REQUIREMENTS  398 

mtttt  first  be  made,  after  which  the  person  making  the  registra- 
tion has  full  legal  authority  to  use  it  for  his  own  purposes. 
Ignorance  of  this  point  has  been  the  chief  soturce  of  trouble  for 
American  manufacturers  who  have  taken  the  step  to  register 
tiieir  maiics  in  foreign  coantries  a  nmtBt  too  late. 

How  the  Trademark 
PiraU  operates 

Trademark  pirates  have  received  considerable  encouragement 
to  ply  their  trade  through  the  ignorance  of  American  manu- 
facturers with  reQ>ect  to  the  procedure  necessary  to  obtain  pn>- 
lection  in  foreign  oonntxies.  This  ignorance  has  cost  many 
American  manufacturers  large  sums  of  money,  for  the  trade- 
mark pirate  in  the  real  sense  of  the  word  is  an  unscrupulous 
being.  Blackmail  is  not  beneath  his  dignity.  Sometimes  a 
milder  method  is  taken  as  for  instance  where  a  trademark  is 
pirated  merely  to  obtain  a  better  bargain  in  negotiating  for 
an  exdttsive  agency. 

Cases  are  also  known  where  agents  in  foreign  countries  in 
order  to  insure  for  themselves  a  permanent  contract  as  repre- 
sentatives of  manufacturers,  register  the  trademark  of  their 
prindpals.  The  latter  in  order  to  protect  his  interests  per- 
mits the  agent  to  oontintte  as  his  representative  under  the 
circumstances.  He  can  do  nothing  else.  He  cannot  change 
his  agency. 

MarH  capable  of 

Registration 

The  following  general  observations  apply  to  ^  kind  of  marks 
that  are  possible  of  registration  in  foreign  countries: 

No  mark  that  is  impossible  of  distinguishing  the  goods 
of  one  person  from  the  goods  of  another  can  be  registered. 

No  person  can  register  a  mark  which  every  person  should 
have  tfie  right  to  use  in  carrying  on  his  business. 

Tliere  are  certain  types  of  marks  favored  In  the  United 
States  which  cannot  be  registered  in  many  countries,  and  for 
this  reason  it  is  important  that  conditions  in  foreign  coun- 
tries be  considered. 

On  tttbttantially  the  tame  bMb  patterns,  designs,  drawings,  and  representations, 
showing  fomu,  shapea,  and  As  outward  appearance  of  specimens  and  models  of 
goods  and  manufactures  are  prelected  under  the  law  of  Joly  24,  1919,  which  confirms 
otherwise  the  provisions  of  the  old  Austrian  law  relating  to  the  subject.  In  this 
case,  however,  two  samples  of  the  article  or  its  picture  along  with  a  certificate  of 
its  identity  shall  hr  j  i  r^mted  with  the  application.  Protection  is  grranted  far  OM^ 
tWb  or  at  mott  tbree  years. — ^Tnde  Commiiioncr  Vlademer  A.  Gennger. 


I 


394  EXPORTING  TO  THE  WORLD 


A  name  should  not  be  used ;  any  other  person  with  the  same 
name  may  have  the  right  to  use  it. 

Initials  cannot  be  registered  in  Great  Britain  nor  in  the 
Colonies;  they  should  not  be  used* 

The  use  of  an  invented  word  in  connection  with  a  patented 
article  is  objectionable  because  it  becomes  common  property 
after  the  patent  runs  out 

Designs  are  very  much  in  favor. 

An  invented  word  is  discouraged  because  if  the  article  be 
comes  known  by  that  name  all  rights  in  the  trademark  are  lost. 

Generally  speaking,  all  marks  possible  of  being  registered  in 
the  United  States  can  be  registered  ahrotd,  with  certain  ex- 
ceptioos. 

In  many  countries  an  American  concern  cannot  register  its 
trade-mark  unless  the  mark  is  already  registered  in  the  United 
States.  The  most  important  of  these  countries  in  which  this 
rule  prevails  are  Germany,  Austria,  Russia,  Spain,  Sweden, 
Guatemala,  Honduras,  Cuba  and  Uruguay. 

In  countries  like  Great  Britain  and  Colonies,  Germany,  Hol- 
land, Sweden,  Peru,  and  Uruguay  opposition  may  be  made  to 
the  r^gistratioi  of  a  tiade^naik  by  others*  «•  in  Oie  United 
States. 


dt«ri^iSS2rtS?il^*Vt5Jf^^  not  forget  a  trade-mark  and  the 

««•  w  wi  mmt HI M,Huu  n  HM  HOOd  tof.    In  this  connection  it  mav       \v««ll  *n  m^ntin^ 

•'trade-marks  in  general.  The  newcomer  Jui  find  stron^l^S 
iTJif^.^^^tt""'?*  '^ather  difficult  to  supplant.  The  Chmcse  purchMer  will  cLo^L 
an  article  w.th  a  lamiliar  trade-mark  rather  than  take  a  chaucS  wSTu  new  irSC 
that  might  seem  superior  to  a  foreisn  buyer     And  whiU  XxT  .  ^ 

fi?'Vtr  cheaper.'^Jere?.  Ic^^known.^S    pe'rhaps  "iSSS? 

i^LtJVil"  <=on"^ction  the  manufacturer  is  urged  to  have  his  rade-mark  reiiSSnS 
«.Jli^-  ^"'^  J°^^°  -^^^"r^  goods,  as  the  piratinE  Sf  Side. 

•"o'^'ty.  «  ■eeantj  ta  case  legal  action  is  necessary.  ' 

fc^-i?*  ♦C""u*°  manufacturer,  however,   irrespective   of  whether  he  doe>  him 

5^rc'ov|jirthf ^^^^^^^^^  hV    t?'Mt^  &Wop%H^£-? 

"^i^J*"  iel~«*  "  imderT^ain^hS?'h£Toumr  f'avor  wIt'hTi'm  21 

wdl  CMtttM  to  porehue  articles  of  that  "chop''^  wXm  a  XinJ  any  Cu^J? 

^fX^rfh  5 hiSll^fis'fir^i"^'!?""  ^^'S  >ts  heating  stoves^info  W^'SSkS 

♦     ^nma.rhis  firm  made  no  effort  whatever  to  orotect  ito  trade- mark  so  that 
today  tens  of  thousands  of  nat  ve-maa«foctiir«d  ■toi^BarbSifuTt^  Arnl^^^fa^  ♦  Va 
mark   ar«»  artM  in  Phi'na  .  —  "w'^  i»c»nn»  tne  American  trade- 

looay  yu  per  cent  of  the  goods  bearing  his  trade-mark  are  imitations 

seeking"  mlrke"t^^ere!"buT  I'.gS^SS^^in'^i^  ^^il"" h^'^.^^'^if  .of^nroduct. 
registration  of  trade-mark,  in  JaSnTSI?  I?  J^ff^ w  "^S®  ^'^^'Z  advisable.  The 
of  the  applicant.  furnishS  %tf?  pi^er  of  So™i5"*"^h  *  representative 
times  a  oommercial  housT  «^rn^Hrn«  T  T  J  «t*o™ey.  The  representative  is  some- 
a-Ti^-M^XAU  sometimes  a  trade  mark  attorney,  who  tnakea  mwJM»>m^Zl 

m  bdialf  of  the  applicant  abroad  and,  upon  receipt  of  the  rririTS*5Sf  If  ■£pHcaHon 
to  represent  the  applicant  in  a  leeal'  process  for^  the  protcctiS^^S^^.SE^'^TK'' 


FOREIGN  TRADEMARK  REQUIREMENTS  m 


Importance  of 

Registration 

'The  apparent  increase  in  the  number  of  unauthorized  ap- 
pUcations  for  the  registration  of  American  trademarks  abroad 
calls  for  an  emphatic  reminder  of  the  necessity  of  early  regis- 
tratioii  of  valuable  trademarks,  especially  in  those  countries 
where  the  ownership  of  marks  is  based  ui>on  r^;istration/' 
says  Commerce  Reports  for  June  1,  1918. 

"The  countries  of  Latin  America  have  furnished  a  particularly 

profitable  field  for  the  registration  of  trademarks  for  speculative 
purposes,  as  most  of  those  countries  grant  the  exclusive  rig^t  to 
use  a  mark  to  the  first  applicant  witiiout  regard  to  its  prior  use 
by  another.  Nearly  every  issue  of  the  official  bulletins  of  some 

Latin  American  countries  contain  applications  for  trademark 
registration  that  are  evidently  fraudulent  or  at  least  unauthor- 
ized. The  names  of  automobiles,  motor  trucks,  pharmaceutical 
pieparattonSy  and  odier  articles,  the  sale  of  which  depends  largdy 
iqxn  advertising  and  good  will  have  been  particularly  subject  to 
misappropriation,  and  recently  a  single  firm  applied  for  the 
registration  of  the  trademarks  of  six  among  the  best-known 
American  cars.  If  registration  had  been  granted,  it  would  have 
been  practically  equivalent  to  the  acquisition  of  an  exclusive 
agency  for  the  importation  of  each  of  these  six  cars  in  one  of 
the  most  important  foreign  markets  for  automolMles  unless  the 
manufacturers  were  willing  to  adopt  a  new  trademark  for  that 
particular  market. 

*Td  another  case  the  designation  'Ford  American  products' 
was  sought  to  be  r^;istered  in  a  South  American  country  for 
all  classes  of  goods.  The  effect  of  this  registration  would  prob- 
ably have  been  to  give  to  the  local  registrant  absolute  control 
over  the  use  of  the  word  'Ford'  on  all  goods  sold  in  that 
country.  This  latter  case  is  illustrative  of  the  difficulties  that 
may  arise  when  a  trademark  used  in  the  United  States  by  vari- 
ous manufacturers  for  different  classes  of  goods  is  registered 
abioad  in  such  a  way  as  to  cover  several  of  these  classes. 
Even  if  the  maik  is  registered  in  good  faith  by  one  entitled  to 
its  use,  the  form  of  registration  may  nevertheless  prevent  the 
use  of  the  mark  on  a  distinct  kind  of  goods  by  another  manu- 
facture except  with  the  consent  of  the  prior  registrant. 

"A  somewhat  different  but  none  the  less  embarrassing  ^tua- 
tkm  may  be  presented  when  a  mark  is  registered  in  the  name 


m 


EXPORTING  TO  THE  WORLD 


of  the  local  agent  of  the  American  manufacturer  or  caqKvter.  As 
long  as  the  exclusive  agency  continues  there  m  usually  no 
difficulties,  hut  should  the  principal  desire  to  make  a  change  in 
the  agency  arrangements  he  may  find  that  the  agent  has  it  in 
his  power  to  prevent  the  importation  of  the  trademarked  goods 
except  when  consigned  to  him  cmt  under  such  terms  as  he 
dictates. 

The  only  safe  course  to  follow  is  to  register  trademarks 
promptly  in  the  name  of  the  manufacturer  in  countries  where 
any  conaiderable  business  is  carried  on  or  anticipated.  Even  if 
aqwirtation  at  the  present  time  is  limited  by  war  condi- 
tions the  registration  of  the  mark  abroad  may  well  be  re- 
garded as  one  of  the  fundamental  steps  of  preparatton  for 
trade  after  the  war.  It  is,  perhaps,  of  even  greater  import- 
aoce  now  than  under  normal  conditions,  in  view  of  the 
reported  activity  of  enemy  agents  and  others  in  appropriating 
American  trade  marks.  The  expense  of  registration  usually 
represents  only  a  reasonable  outlay  for  the  protection  of 
good  will,  and  it  is  suggested  that  any  article  which  is  worth 
advertising  abroad  is  worth  protecting  by  means  of  tfide- 
mark  rqpstration. 

"Steps  are  now  bdi^  taken  toward  the  immediate  establish- 
ment of  the  International  Bureau  for  Trade-Mark  Registration 
at  Habana.    On  March  14,  1918,  the  President  of  Cuba  trans- 
mitted to  the  National  Congress  a  message  reviewing  the'actkm 
taken  and  requesting  the  af^mypdatkm  of  $10,000  as  the  con- 
tributkm  of  the  Cuban  Government  toward  the  initial  expenses 
of  the  bureau.    The  expenses  are  to  be  borne  by  the  various 
governments  in  the  same  proportion  as  that  tfftaMinhfd  by  ttut 
Pan-American  Union  at  Washington.   When  the  necessary 
arrangements  have  been  completed  the  payment  of  a  single  fee 
of  pO  will  secure  registration  for  a  trademark  in  all  the 
countries  rq>resented  in  the  Bureau,  including  Costa  Rka,  Cuba, 
Dominican  Republic,  Guatemala,  Honduras,  JRcaragua  and  Pan- 
ama, and  such  others  as  may  later  be  added,  as  well  as  in  the 
countries  of  South  America  when  the  second  V^yfau  hav« 
been  established  at  Rio  de  Janeiro. 

"The  Goftnunent  of  the  United  States  has  smce  made  an 
appropriatkxn  of  $56,980  toward  the  expenses  of  operation,  and 


FOREIGN  TRADEMARK  REQUIREMENTS  397 


the  new  bureau  is  reported  to  be  accepting  applications  for  the 
international  r^stration  of  American  trademarks.  Appli- 
cations should  be  sent  to  the  United  States  Patent  Office  at 
Washingtcm.'' 


CHAPTER  XXIV 


PUBLICITY  IN  FOREIGN  COUNTRIES 

Americm  uidtistry  should  have  a  publicity  agent  in  fei^ 
mga  countries. 

The  functions  of  this  publicity  agent  should  be  to  dissemi- 
nate American  intelligence  in  every  foreign  country  in  the 
world.  He  should  keep  the  foreign  world  in  close  touch  wMi 
the  progress  and  develofMnent  of  this  country.  He  should 
be  prepared  to  combat  the  evil  propaganda  our  trade  rivals 
are  sure  to  spread  wherever  American  business  interferes 
with  their  interests. 

The  necessity  of  publicity  in  foreign  countries  was  fvXty 
demonstrated  during  America's  fNuticipation  in  the  World 
War.  When  the  vicious  German  propaganda  began  to  spread 
to  all  countries  of  the  globe,  attacking  America's  motives  in 
entering  the  struggle,  it  became  evident  in  this  country  that 
this  campaign  <^  untruth  had  to  be  stopped.  The  government 
at  once  oiganized  a  foreign  publicity  service  that  reached 
every  comer  of  the  globe  where  people  could  read  and  under- 
stand— and  the  result  of  this  campaign  was  most  gratifying. 
When  the  war  came  to  an  end  this  publicity  service  was 
dropped,  and  American  interests  engaged  in  foreign  trade 
abroad  Instantly  recognized  the  necessity  of  keeping  up  in  one 
form  or  another  a  publicity  program  that  would  place  us  in 
the  true  light  in  regard  to  our  motives  and  aims  in  connection 
with  foreign  matters.  Efforts  have  been  made  from  time  to 
time  to  revive  Ae  work  that  the  government  had  dropped  at 
condttsico  of  the  war  but  it  seems  that  thQr  have  been 
made  in  vain. 

American  Press  Associations 
Now  Active  «»  Foreign  Field 

A  redeeming  feature  of  the  situation,  however,  lies  in  the 
extension  of  the  service  of  the  great  American  press  ^trnrria- 

398 


PUBLiaTY  IN  FOREIGN  COUNTRIES  m 


tions  to  foreign  countries.  These  organizations  are  respon- 
sible for  the  presentation  of  more  American  news  in  foreign 
newspapers  than  ever  before  in  their  history.  Particularly 
in  South  America,  where  in  the  past  the  greater  percentage 
of  iht  news  came  from  Europe  before  the  war,  there  has  been 
a  great  improvement  in  the  use  of  American  news  in  the  press 
of  that  continent.  Today  in  the  great  newspapers  of  South 
America  one  may  hnd  a  reasonable  share  of  the  space  devoted 
to  American  cable  dispatches  sent  out  by  the  American  press 
associations.  Before  the  entrance  of  the  American  concoms 
in  the  southern  field,  whatever  little  American  news  did  creep 
into  the  South  American  newspapers  came  by  way  of  Europe, 
and  as  a  consequence  much  of  it  was  richly  colored. 

The  American  press  associations,  however,  cannot  be  ex- 
pected to  carry  on  a  publicity  campaign  for  American  inter- 
ests abroad.  Their  chief  function  is  to  distribute  news,  and 
the  moment  they  deviate  from  this  function  their  efficiency  in 
this  detail  is  likely  to  suffer.  Nor  must  any  organization  or 
set  of  organizations  that  may  be  inclined  to  take  up  this 
tremendous  task  attempt  to  compete  with  these  press  asso- 
ciations. Instead,  their  work  should  supplement  the  efforts 
of  these  quasi-public  concerns  without  encroaching  upon  their 
basic  functions. 

There  is  no  question  that  there  is  a  field  for  this  sort  of 
work  in  foreign  countries  where  so  often  misunderstandings 
arise  concerning  the  motives  of  the  American  people  in  their 
activities  in  connection  with  international  affairs.  These  mis- 
understandings are  partly  due  to  misinformation,  partly  due 
to  inaccuracy  of  statements,  and  partly  due  to  vicious  propa- 
ganda on  the  part  of  our  enemies.  This  situation  had  much 
to  do  with  the  organization  of  the  government's  publicity 
work  abroad  during  the  war.  It  was  essential  in  this  case 
to  fully  explain  our  aims  and  ideals  in  connection  with  the 
war  in  order  that  the  foreign  people,  who  had  in  a  measure 
succumbed  to  the  perverted  German  propaganda,  could  under- 
stand our  true  position  in  the  great  struggle. 

With  peace  at  hand  and  competition  among  nations  inten- 
sified more  than  ever  in  their  struggle  for  commercial 
supremacy,  it  is  more  than  certain  that  there  will  be  a  re- 
currence of  this  propaganda  against  the  United  States  in 
some  form  or  another,  and  this  country  must  be  prepared 


400  EXPORTING  TO  THE  WORLD 


to  meet  it.  As  a  matter  of  fact  immediately  alter  tlie  war 
attadcs  upon  America  had  already  begun.   An  instance  in 

point  may  be  given  to  illustrate  the  ruthlessness  with  which 
our  competitors  have  already  begun  to  fight  American  inter- 
ests: The  Webb-Pomerene  law  was  apparently  enacted  to 
permit  manufacturers  to  combine  for  txpoft  trade  for  the 
purpose  ci  economizing  in  overhead  expenses,  and  expediting 
the  sale  <^  goods  abroad.  However,  the  aims  of  our  manu- 
facturers and  exporters  were  questioned  in  certain  sections  of 
South  America  when  a  partial  text  of  the  law  had  been  re- 
ceived there  Our  competitors  spread  reports  to  the  effect 
that  the  Webb  law  was  purdy  a  device  by  American  capital- 
ists to  monopolize  foreign  markets,  and  to  tighten  their  grip 
on  foreign  customers  to  such  a  degree  that  they  could  sell 
at  their  own  prices.  Without  entering  into  the  merits  of  the 
Webb  Act,  it  is  apparent  that  those  who  are  opposed  to 
American  advances  in  foreign  fields,  are  willing  to  grab  any 
straw  within  reach  to  use  as  a  bads  for  attacking  our  mo- 
tives.  It  is  doubtful  if  these  attacks  were  ever  answered. 

Instances  such  as  this  are  occurring  in  all  parts  of  the  world 
right  along.  American  travelers  returning  home  after  months 
on  the  road  in  foreign  countries  have  related  similar  instances 
in  which  American  interests  have  been  the  subject  of  vicious 
attacks. 

Publicity  Machine  % 
Should  Be  Organised 

It  scans  that,  in  view  of  these  underhand  methods  of 
combatting  American  competition,  our  manufacturers  and  ex- 
porters who  are  most  vitally  interested  in  the  establishment 
of  our  good  lyill  and  confidence  in  foreign  countries  where 
we  are  desirous  of  building  up  trade^  and  where  these  un- 
frien^y  activities  are  manifest,  should  take  the  initiative  in 
ofganizing  a  gigantic  publicity  machine  along  the  lines  fol- 
lowed by  the  defunct  Committee  on  Public  Information  of 
the  United  States  Government  for  the  purposes  of  dissemin- 
ating information  in  foreign  lands.  This  machine  or  bureau 
should  be  established  in  the  principal  American  port,  and 
should  have  cable  connections  with  all  the  principal  markets 
of  the  world.  It  should  be  in  charge  of  competent  and  intelli- 


PUBLICITY  IN   FOREIGN  COUNTRIES  401 


gent  newspaper  men  who  understand  how  to  prepare  and  to 
distribute  news  matter.  There  ^uld  be  representatives  in 
foreign  countries  to  receive  these  cables  or  any  other  mate- 
ria! that  may  be  sent  from  the  home  office,  and  to  see  that 
intelligent  distribution  to  the  press  of  the  country  in  which 
they  are  located,  is  effected. 

Not  only  should  the  publicity  bureau  confine  its  activities 
to  the  despatching  of  cable  stcnies  to  foreign  countries  but 
it  should  also  conduct  a  mail  service  composed  of  material 
intelligently  collected  in  this  country  for  the  use  of  the  press 
abroad.  There  is  a  wealth  of  material  in  this  country  of  tre- 
mendous value  for  this  kind  of  publicity  work  that  the  for- 
eign' newspapers,  generally  speaking,  would  be  only  too  glad 
to  use,  if  someone  would  mail  it  to  ihem. 

The  publicity  bureau  should  also  perform  the  functions  of 
an  information  bureau.  It  should  keep  foreign  countries  in 
close  touch  with  legislation  directly  or  indirectly  connected 
with  international  trade.  It  shouki  see  to  it  that  where  there 
ts  some  doubt  as  to  the  interpretation  of  certain  American  ac- 
tivities, a  full  explanation  is  given  out  to  the  foreign  press 
without  delay. 

Articles  describing  our  various  industries,  showing  how 
American  ptodocts  are  made;  articles  explaining  the  advan- 
tages of  highways,  safety-first  devices,  systems  sanitatimi, 

central  heating  plants,  modem  plumbing,  etc. — all  these  are 
of  vital  interest  to  people  living  in  foreign  countries  and 
whose  standard  of  caadoft  is  not  as  high  as  that  which  we 
enjoy  in  this  country. 

Supplementing  this  cable  and  mail  service  the  motion  pic- 
ture could  be  brought  into  play.  In  fact,  a  publicity  cam- 
paign would  not  be  complete  without  the  motion  picture.  As 
a  device  to  interpret  American  enterprise,  and  to  visualize  the 
immensity  <^  our  industrial  machine  the  motion  picture  is  un- 
equalled. It  tells  the  story  better  dian  the  words  of  any 
writer.  Already,  individual  American  industries  are  turning 
to  the  motion  picture  to  demonstrate  their  products  abroad 
with  most  gratifying  results.  With  the  number  of  motion 
picture  theaters  growing  in  all  parts  of  the  world  the  use  of 
the  "movies"  for  publicity  work  is  practical. 

A  publicity  bureau  of  this  sort,  using  the  printed  word  and 
the  motion  picture  for  the  dissemination  of  information 


408  EXPORTING  TO  THE  WORLD 


abroad  would  be  of  inestimable  value  to  American  interests. 
It  would  seem  that  such  worthy  organizations  as  the  Foreign 
Tilde  Coimcil  or  the  American  Manufacturers  Eiport  A8M>- 
elation,  or  some  other  competent  organization  closely  con- 
nected with  foreign  commerce  should  take  the  lead  to  plan 
some  form  of  organization  to  handle  American  publicity 
abroad  in  the  interests  of  American  business  along  some 
such  tines  as  have  been  suggested  in  this  chapter. 
The  results  would  be  worth  the  effort 


APPENDIX 


UMITSD  tTATBS  SZPOSTa  BY  CmAMD  DmSIOIfS 


Fiscal 

Exports  to— 

Year 

Europe     No.  America  So.  America 

A  at  A 
AalSL 

Ulrica* 

1870. . . 

.$420,184,014 

$68,962,006 

$^1,651,459 

$10,972,064 

$4,334,991 

$3,414,768 

1871... 

.  479.738.693 

77,348,184 

19,599.581 

7.781,138 

3.307341 

3.203,113 

1872... 

73,2301648 

37,006,890 

13,965,166 

3,613,788 

4305,140 

1873... 

.  539.061,328 

81.689,759 

29,661,967 

18,727,094 

4,677,457 

3,524.474 

1874... 

.  572,511,479 

94,942,138 

26.747,020 

15,087,695 

4,493,916 

3,037,144 

1875... 

.  533,544.921 

86,166,454 

24.096.950 

13,972.305 

4,276.305 

3.470.782 

1876... 

.  538.322.83S 

79,926,699 

22,862,746 

15.528.567 

4371312 

4.814.382 

1877....  SiJ^MS 

83,058.656 

32,577,154 

27,14^5 

7345.929 

4371,788 

U78....  597,774,9S» 

78,762,184 

24,690,478 

28,998,343 

8,607,644 

4,770,729 

1879... 

.  594,189,272 

67,598,525 

23,437,376 

11,752,969 

9,900.550 

4,758,701 

1880... 

.  719.433.788 

69,437,783 

23.190.220 

11.645,703 

6.846.698 

5,084,466 

1881....  7<M13Jf8 

83,156399 

85,304346 

12317348 

9,506377 

5,377,878 

1888....  600,100^98 

85,793,255 

27324350 

18.393.67r 

12,4601664 

6369.319 

1883... 

.  659,867,396 

99,428,476 

29,570,659 

16,348.742 

13,571,721 

5,052,480 

1884... 

.  583,795.462 

92,217,190 

31,226.934 

16,913,978 

13,105.604 

3,254,441 

1885... 

.  599,240.748 

76,764.748 

27.734.857 

20.739.972 

13.605.468 

4.103.962 

1886. « « 

.  S41J73,«89 

71.980,400 

26.131.991 

31,980,999 

14377,407 

3380.994 

1887... 

.  575.300,338 

73.425,948 

30,744,497 

19,322,172 

13,867.552 

3,552,716 

1888. . . 

.  549,092,503 

79,995,497 

29,579,227 

18,929.152 

14.746.065 

3,612,063 

1889... 

.  578,902,520 

89.550,476 

35.021,017 

18,439,626 

16.239,403 

4,248,333 

1890... 

.  683.736.397 

94,100,410 

38.752,648 

19.696,820 

16.460.269 

5.082.140 

1891... 

.  704.798,047 

96,549.129 

33,708,290 

25353,308 

18321301 

53S033S 

1892... 

.  850,623.150 

105,566.184 

33,147,614 

19.590,350 

15,572,767 

5.778.083 

1893... 

.  661.976.910 

119,788,889 

32,639,077 

16,222,354 

11.199.477 

5,838,487 

1894... 

.  700.870.822 

119,693.212 

33.212.310 

20.872,761 

11,914.182 

5377.285 

189S... 

.  637.927,693 

108,575,594 

33,535.935 

17325,057 

13.109331 

7,074.656 

1896... 

.  673.043.753 

116.567.496 

36,297,671 

25,630,029 

17,197.229 

13,870.760 

1897... 

.  813.385,644 

124.958.461 

33.768.646 

39,274,905 

22,652,773 

16,953,127 

1898. . . 

.  973.806.245 

139.627,841 

33.821.701 

44,707.791 

22,003.022 

17,515,730 

1889. • • 

.  936,602,093 

157.931.707 

35.659.903 

48,360,161 

29,875,015 

18.594.424 

1900... 

.1.840.167.763 

187.594.625 

38^945363 

64*913307 

43391375 

19369,849 

1901 . . . 

.1.136.504.605 

196.534,460 

44,400.195 

49,390,712 

35.392,401 

25,542,613 

1902... 

.1.008,033,981 

203.971.080 

38.043.617 

63,944.077 

34,258.041 

33,468.605 

1903... 

.1.029.256,657 

215,482.769 

41.137,872 

58359,016 

37,468,512 

38,436,863 

J^0^» •  • 

.1,057,930.131 

834.909.999 

50.755.027 

60.151.347 

32,850,681 

24330.126 

1^908*  •  • 

.1,020,972.641 

260.570.235 

56,894,131 

128,504.610 

33379.446 

18,540303 

1906... 

.1.200.166,036 

308,382.982 

75,159,781 

105,451.610 

35,141,751 

19,562.340 

1907... 

.1.298,452.380 

349,840,641 

82,157,174 

92,703.664 

41,186,193 

16.511,026 

1908... 

.1,283,600,155 

324.674.719 

83,583,874 

101.784,832 

46,789.201 

20,340.565 

1909... 

.1,146,755.321 

309.476.694 

76361.680 

71.798.187 

41389.788 

17.035334 

1910... 

.1,135.914.551 

385,520,069 

93.246,820 

60.861,813 

50,890,087 

18,551,380 

1911. . . 

.1,308.275.778 

457,950,179 

108.894.894 

85,422,428 

66,060,813 

23,607.107 

1912... 

.1,341,732,789 

516.837.597 

132.310.451 

117,461,635 

71,936,513 

24,043.424 

IflS... 

.1.479.074^761 

817,413.813 

146.147.993 

115,056,620 

79,102.845 

29.088.917 

1914... 

.1.486.498.729 

528.644,962 

124339.909 

113.425,616 

83.568.417 

27.901,515 

1915... 

.1,971,434,687 

477,075.727 

99,323.957 

114,470,493 

77.764,725 

28.519,751 

1916... 

.2.999,305.097 

733.024,674 

180.175.374 

278.610.881 

98,775.828 

43.591.031 

1917.... 4*324,512.661 

1.163.758.100 

259.480.371 

380,249,708 

109  314.490 

52.733.064 

3143iMSt 

44735^15 

134389300 

55,423368 

408 


APPENDIX 


Pet.  from 

Pot.  to 

Fiscal 

Total 

From  Latin 

I  Latin 

To  Latin 

Latin 

Tear 

America 

America 

America  America 

1893  . 

1866^400,922 

1225,906.702 

26.08 

1847,665.194 

$88,503,514 

10.44 

19H  . 

iH99«4ta 

21MC2^1 

33.34 

•92,140,572 

78,924,298 

8.85 

1895  . 

731.969.965 

196,516.050 

26.8S 

•07M1CS 

9.22 

1896  . 

779,724,674 

180,022,806 

23.09 

882.606,938 

76.611,305 

8.68 

1897  . 

764,730,412 

156.661,864 

20.49 

1,050,993,556 

78.320.416 

7.45 

€16,049,654 

136»854,235 

22.21 

1,231,482,330 

74,030,291 

6.01 

1»9  . 

697,148^4« 

i4a»iso,a97 

21.2S 

1,227,023,302 

n;307,it7 

7.20 

1900  . 

849.941.184 

167,180,295 

19.67 

1.394.483.082 

110,674^490 

7.96 

1901  . 

823.172.165 

198,233,744 

24.08 

1,487.764,991 

118,772.158 

7.9t 

1902  . 

903.320,948 

208,510,497 

23.08 

1.381,719.401 

115,132.413 

8.33 

IMS  . 

1,023,719,237 

22S,923,09« 

22.M 

1,420,141,679 

115,053,595 

8.10 

1904  . 

991,087,371 

256,227,244 

2S.8S 

lJMlS,3tl 

9.2S 

1905  . 

1.117,513,071 

302.266.593 

27.05 

1,518,561,666 

159.,156.657 

i0.4t 

1S06  . 

1.226.562,446 

294,049,326 

23.97 

1,743,864.500 

209,043,359 

11.99 

im  . 

1,434,421,42S 

334,572,126 

23.33 

1,880,851,078 

229,966.603 

12.23 

1908  . 

1.194.341,792 

273,17Mn 

22.t7 

1,S60,773,34« 

219,968,513 

11.82 

1909  . 

1,311,9J'J.224 

324,154,136 

24.71 

1,663,012,204 

JM,912,t74 

12.14 

1910  . 

1,556.947,430 

392,955,257 

25.24 

1,744.984,720 

242,123,502 

13.87 

1911  . 

1,527,226,105 

371,300,234 

24.31 

2,049,320.199 

273,525.344 

13.35 

1912  . 

i-iiiiiiLtM 

423,037,2i8 

SS.S9 

2,204,322,409 

196,141.651 

13.43 

1913  . 

1,813,008.234 

442,419,973 

24.40 

MCS,at4,149 

123,775,883 

13.13 

1914  . 

1,893,925.657 

469,082,667 

24.77 

2,364,579,148 

282,070,153 

11.92 

1915  . 

1,674,169,740 

557.413,053 

33.29 

2.768.589,340 

251,469,431 

9.08 

191C  ,i 

i,i97,iSMie 

760,132,729 

34.58 

4,333,482,885 

411,193.859 

9.40 

1917  . 

2.659.355,185 

962,860,611 

jf.ai 

ik290,048^394 

581,954,695 

9.25 

191S 

2,946,059,403 

9tMiM71 

Jt.44 

12.24 

i^A^^^?!  CtmM  iUBortaa.  Sovtli  Amoriea,  and  the  Weit 

ladies,  with  exception  of  Brttlsh.  Danish,  Dnteh,  aad  Vreaoh. 

■«,i^?ri'M^  ^^^^^^  ^'^^  exports  of  United  States  to  tho 

■•Parato  lAtla  American  countriee  in  year  ended  June  30.  1918  were* 

«  437'809.'^r"^  Ouatemala.  |7.822.9(i;  ^^^^1^ 

15,437,809;  Nicaragua.  |4.590,037;  Panama.  S7.ia290«  MvaAa^  ocmi^ 

Mexico,  1140,801.097:  Cuba.  I264.i24.006?^mln-^;T8:06TS^^ 

^^f^43f^^J^^£Si^        110,887.968;  Paramiay,  $69,797 
«^ru.  .»4i.43!?  218,  Umffway,  fl2,ilMP;  ▼•■oaaOla,  $13,287,728. 

Exports  from  United  State*  to  CoaU  Rtea.  MtMraiAt  Om.*^.!. 

♦M»2.760:  Honduras.  ,4.6,..72,;  mc.r^TTt^^SSn^^^J'ffSS^. 


4M 


APPENDUL 


PRINCIPAL  POSTS  OP  THK  WORLD 


COooipiloa  by  tlM  Ualtod  8tat« 

Ml  I>0PI 

WtBDIOBt  Of  O 

onunovoo. 

.000  omlttod.) 

Total 

CoaaitrF  wnA  Fort 

Tr. 

Import! 

BkpMts 

Oommoroe 

BUROPB 

Dollars 

Dollars 

Dollars 

iy*o 

1  ■I/IO  044 

l,/4o,933 

917,060 

2f665|9yJ 

1910 

l,2o2,73> 

954,624 

2,317,359 

TY..  11 

101  4C 

Zo3,547 

158,702 

j/)0  ^AA 

1 Q1  £ 

^03,4J5 

1  AT  A  C  A 

107,950 

341,385 

1910 

164,508 

204.759 

369.267 

23,102 

81,926 

_  ^  J  t  JMI 

65,711 

109,702 

4/,yyu 

4  A^ 

1,996 

49,986 

1  Q1  1 

1  AO^  IOC 

1,084,3^5 

817,275 

<   AAI  i^AA 

1.901,600 

V9\9 

211,#Z1 

9oZ,OZ9 

^^9.A  ■^^•••«Mn  •       A  ttk^^HVASMBk 

lyu 

0M,104 

coo  1  oi 
588,181 

1,211,345 

389,639 

^^C 

365,733 

/o5,3/i; 

357.924 

258.795 

£1      71  A 

lo7,53o 

30,201 

vat* 

89,163 

78^606 

lo7,7o9 

1  oi  c 

387,600 

120.934 

CAO  C*>>^ 

508,534 

1916 

90.945 

31,768 

122,713 

1912 

74.360 

28,600 

102.960 

A  MBAiA   OiM«B AHA  flSav •  M^Mftjua^ja 

1919 

175,997 

Iel,430 

33/,4«o 

1  At  1 

1912 

43,833 

53,923 

97,750 

Iyl5 

14^675 

16,841 

31,416 

1915 

4  A9 

103 

566 

4avc 
1919 

721 

51 

772 

v%  j9  a  44 

lOI  A 

iyi4 

4.061 

27.852 

31,913 

T.ihmt 

1 Q 1  A 

4  TA'9 

15,703 

1 A  con 

1 0I  X 

9,573 

35,858 

45  .4  J I 

MiVn1a.l«w 

IMA 

9*9 

18,442 

ly.aio 

1914 

4»4i9 

14,593 

•  A  A/r<) 

iy,uoJ 

26,481 

1,752 

J33 

fi  v\o  \  n  *     LJ  n        A 1 A  «%  A 

79,428 

A  A  0)0 

1  no  o/;7 

1913 

14.342 

19,162 

33,5U4 

1912 

22,273 

9,n9 

33,201 

OCEANIA 

10K 

loi  £7/; 
lV3,6/6 

33U.  /^o 

ICelbourne  

1916 

a  ^  a  w 

129  430 

67  034 

196  464 

AMERICA 

Dollars 

Dollars 

Dollars 

Unit.  States:  New  York  

1917 

1,338.199 

3,053,120 

4.391,319 

1917 

8.505 

266.279 

274,784 

1917 

mS17 

303,510 

408,027 

1917 

217,905 

225.678 

443,483 

1917 

109,486 

464,471 

573,957 

1917 

43.973 

374,033 

418,006 

1917 

144,027 

142,890 

286,917 

1917 

198,321 

177,650 

376,971 

Virginia   

1917 

19,330 

137,012 

1S6.342 

1917 

67.715 

217,120 

284335 

MIehiffan  

1917 

41,749 

290.376 

232,125 

1917 

92»ii0 

103,939 

202,599 

Canada:  Montreal  

1917 

222,119 

384,314 

606,432 

Mexico:  Vera  Cruz  

1913 

40,733 

42,118 

82,851 

1913 

22,825 

40,379 

32,204 

1916 

183,1M 

89,006 

272,159 

<ArCMittea:  Baoaoa  aIm  .... 

19l« 

mm 

440^168 

405 


APPENDIX 


PUNCIPAI*  POSTS  OF  THB  WORLD  friwitimwiP 
iCmm^n^dhwU^Vnm^mM^JH^MmmttotComM^  .000  omitted) 


Total 

OMtttrj  Mid  Fort 

JBiXpOFui 

Commerce 

BUROPB 

Dollars 

VoUmn 

Dollars 

1916 

52,093 

118,229 

17042S 

1916 

86.597 

47,604 

134.201 

IflS 

364M 

11.929 

38.235 

1915 

8,5J9 

30.596 

Peru:  Callao   

1916 

29,277 

Uruguay:  Montevideo  

1911 

42,627 

7V»4 

ASIA 

China:  Shaai^uU   

m§ 

m,49$ 

348,701 

1916 

21.487 

Tientsin   

1916 

36,718 

54.4M 

Jbpmi:  Tokohaina  

1916 

104,554 

248.080 

352,634 

Kobe  

im 

186,488 

165.056 

351,544 

Osaka   

1916 

40.867 

f%$99 

Brit.  Colonies:  Singapore  

1916 

244,589 

214,600 

111.557 

1916 

167.667 

285,859 

453,525 

IM 

143.422 

143.846 

AFRICA 

m§ 

mm 

miPBK4TIIRS  AND  RAINFALL  OF  FOKfilQN  CITISg 


Mean  Annual 
Annual  Aver- 


catjr  or  Plaos 

•  mgm 

pera 

•  Rain- 

ture 

fall 

Inches 

8 

M 

16 

16 

9 

SI 

Bermuda   

65 

46 

Bombay   

75 

29 

65 

25 

Caiorraposffeo  ... 

•  •  •    •  • .  • 

458 

33 

Constantinoplo  . 

••••  57.7 

29 

22 

Dolhl  

28 

3t 

29 

82 

44 

52 

39 

3S 

Mian  Annual 

Annual  Aver- 


CItsr  or  Plaoo 

Tern- 

age 

pora- 

-  Rain- 

taro 

3 

Lisbon   

39 

3S 

Madrid  

9 

Melboume  

29 

23 

MoatovMoo  . 

44 

McM^rsal 

...  41.9 

41 

as 

Nice   , 

29 

76 

22 

3S 

17 

40 

Rio  de  Janeiro 

43 

3t 

If 

26 

58 

30 

M 

ItO 

3S 

i06 


APPENDIX 


TABLE  FOR  CONVERSION  OP  POUNDS  AVOIRDUPOIS 

INTO  KILOGRAMS 

To  find  the  weight  in  kilos  of  a  shipmont  of  merchandise  weighing 
sajr,  1M71  ItMn  And  tbo  nvmbor  ot  pounds  la  tho  oolvmn  markod  lbs." 
Tho  ovdvmloat  avmbor  of  kilos  is  in  tho  toUowinv  eolnma  tlins: 

Lbs.    10.000   =   Kilos  4536.00 

400    =  181.44 
71    =r        "  32.206 


Lbs.    10.471    =   KUOS  4749.646 

To  find  tbo  wolsht  in  kilos  of  Lbs.  100,000,  take  the  kilo  oqnlTalont 

of  Lbs.  10.000,  i.  e..  Kilos  4536.00,  and  move  the  decimal  point  one  flCWa 
to  the  riffht,  thus:  libs.  100,000.:=KUos  4M60.00. 


bs. 

itnnel 

Belles 

MBO. 

oQwai 

Kilos 

• 
1 

M 

•  0.453O 

48 

M 

21.773 

m 

m 

M 

t  0.9072 

49 

M 

22.226 

3 

tt 

1.3608 

SO 

•i 

22.680 

M 

1.8144 

51 

23.134 

• 
• 

M 

3.«Hw 

53 

M 

33.587 

O 

M 

.  2.7216 

53 

ii 

24.041 

• 

7 

t$ 

3.1752 

64 

M 

24.494 

9 

0t 

3.6288 

55 

24.948 

m 
W 

M 

4.0834 

5e 

25.4Q2 

10 

M 

•  4.5JOO 

57 

A. 

25.855 

11 

M 

58 

26.309 

t9 

M 

M 

59 

0g 

26.762 

11 

M 

OO 

M 

27.216 

%A, 
19 

M 

Dl 

M 

4IMO  JIUl. 

2¥,6lr0 

la 

M 

62 

28.123 

IS 

M 

7  2S8 

M 

28.577 

17 

M 

7.711 

64 

M 

29.030 

IS 

M 

t.ldS 

65 

M 

29.484 

19 

M 

8.618 

66 

M 

29.938 

20 

M 

9.072 

67 

M 

30.391 

31 

« 

9.526 

68 

M 

30.845 

33 

M 

9.979 

69 

M 

31.2M 

33 

M 

10.433 

70 

M 

31.752 

24 

M 

10.886 

71 

M 

32.206 

3S 

M 

11.340 

72 

M 

#  32.659 

3i 

M 

11.794 

73 

M 

33.113 

27 

M 

12.247 

74 

M 

33.566 

28 

M 

12.701 

75 

M 

34.020 

39 

M 

13.154 

76 

M 

34.474 

30 

M 

13.600 

77 

M 

34.937 

31 

M 

14.062 

78 

M 

35.381 

33 

M 

14.515 

79 

M 

35.834 

33 

M 

14.969 

80 

M 

36.288 

34 

M 

1S.433 

81 

M 

36.742 

31 

M 

1S.S76 

83 

M 

37.195 

36 

M 

16.330 

83 

M 

37.049 

37 

M 

16.783 

84 

W 

38.102 

33 

M 

17.237 

85 

M 

38.556 

39 

M 

17.490 

86 

M 

39.010 

40 

M 

18.144 

87 

« 

39.463 

41 

M 

18.598 

88 

W 

39.917 

43 

M 

19.051 

89 

M 

40.370 

43 

M 

19.S0S 

90 

M 

40.824 

44 

M 

19.958 

91 

«i 

41.278 

45 

M 

20.412 

92 

M 

41.731 

4$ 

M 

20.886 

93 

M 

42.185 

47 

M 

SM19 

M 

M 

42.638 

407 


TABU  FOR  CONVBKSION 

XHTO 


OP  POUND  AVOIRDUPOIS 
AMI  (ContlmMd) 


Lbs. 

equal 

Kilos 

Lbs. 

equal 

Kilofl 

9S 

M 

43.092 

8000 

M 

•  •  >  <90ao.oU 

9€ 

M 

43.544 

9000 

M 

...     4082  40 

97 

M 

43.999 

10000 

M 

. . .  4S34.00 

98 

M 

44.453 

11000 

M 

...  4990.00 

99 

M 

44.906 

12000 

M 

. . .  5443.00 

IM 

«• 

4S.36 

11000 

M 

. . .  5897.00 

200 

.        •*           .  ,  ,  , 

90.72 

14000 

M 

...  0150.00 

300 

M 

136.08 

15000 

M 

...  4004.00 

400 

M 

181.44 

16000 

M 

. . .  7258.00 

SM 

'  m 

22S.80 

17000 

M 

...  7711.00 

600 

M 

272.16 

liooo 

M 

. . .  0165.00 

700 

M 

317.52 

19000 

M 

...  8618.00 

800 

M 

362.88 

20000 

M 

. . .  9072.00 

990 

loeo 

M 

408.24 

25000 

M 

. . .  11340.00 

M 

45$M 

30000 

M 

...  13608.00 

2000 

M 

mM 

40000 

M 

...  18144.00 

3000 

M 

1360.80 

SOOOO 

M 

...  22600.00 

4000 

M 

1814.40 

60000 

M 

...  27216.00 

5000 

M 

2268.00 

70000 

M 

...  31752.00 

6000 

«i 

2721.60 

80000 

M 

. .  .  36288.00 

M 

•  ••• 

917190 

00000 

« 

...  40824.00 

?3 


••  •  -  trt  "  .2 

^  ^  ^  ^  ^  ^ 


J' 


APPENDIX 


I 

II 

tn 

I 

s 

s 


9 
o 

03 


»4 

> 
I— I 

o 


o 


to  .a 

S  2 

8* 


8« 


to 


o  o  i 


O  ^  bo 
C  ^  (3 


Si  .1..;  ed  ^  — 
6p  S  2  2  O  5 


3 
o 
.o 
ct 

9 

bfi 

ei 

o 
H 
« 

h 
9 

a 
a 

A 

47 
I— t 

.O 

•«-> 

0) 

o 
o 

I 


o 

u 
u 


58 

n 

09  ;3 

m  ^  cS 
a 

«  "  CI 

2  d  ^ 

O 


o 


15 


9 


©  Eh 
o  S 


§  ® 


•— < 

d 

Co 

o  s  .2 
>  ^ 

s 


2  ^ 

"  cS 

J*  fl)  O  3  -3  © 
©  • 

H  H   


« 

3 


5  6 

.  o 


(3 
O 


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d 


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w 


a 

6 


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© 

I 


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H 

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I 


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bo 


4 


1? 


e 
d 


2 


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o  o 
00 


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2  iSa 


moo 
\n  o  o 
vo  o  o 
O  o 


O  *  CO  CJ  to  O  NO 

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«  00  00  lf3  ON  O 

eo  '-<  rH  1-H  o 


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u  ^ 
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d  d  d 
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d 

d  d  d  >^ 


1 


Si  9  s. 


3  i 


409 


APPENDIX 


.J 


APPENDIX 


^0  04  to  t-i  M  f4  M 

On  O  ro  eg  O  VO 

O  ^  »^  ^  ^  10 

t-l  V4        P4  p4 


60  •  .  ••!•»>«•• 
0'=5«  te-S  c*j        c  00^^ 


o  o  «4 

O  00  ^0  ro 


u 


O  o  r<)  tn 
f<j  00 
On 

n 


o  o 


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•t  »*i 


3 


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>llar  . 

,  •  •  w 

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0  9  2  S 

00  0  0  9 

Q 

Q 

«  hi  9  0 
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APPENDIX 


PANAMA  CANAL  TKAmC 


-Atlantic  to  Paciflo- 


CVIa* 

1915  . 

1916  . 

1917  . 
]«!•  . 
1919  . 


Veg-  Cargo 


530 
411 
905 
921 
921 


2.657,865 

1,912,846 
4,170,733 
3.938.042 


Net 

1^.72t 

1,308.231 
2,925,414 
2.750,378 


Carso  Ves- 


-Paciflc 
OroM 


2,12S.7SS  SSt 

1,434,236  376 
3,076,843  971 
2.639,466  1,209 

%mfi6§  i,iM 


3,7SI^9t9 

1.683.683 
4,360.088 
5,433.297 
4.418,]M 


to  Atlantic- 
Net 
Tons 

l,95a^ 

I.I7IM 
3,083,944 
3.908,480 
3.443.006 


Cargo 
Tons 

2.844.057 
I.705.8IO 
4,152,412 
4.922,647 
4,029,742 


Total  3,688  1^139,903  11^61^  12^54^5  4,300  13»5«iM  U^iHM 

TOKAIt 


1,088 
787 
1,876 
2,130 
^107 

7,988 


5,416,787 
3,596.529 
8,530,821 
9,371,339 
7,t747«l 

34,794,079 


N«t  Tons 

3.843.03S 

4,9«f,793 

2.479.762 

3.140.046 

6,009,358 

7,229.255 

7,562,113 

<4J1.S7S 

26,11^98 

29^09,013 

Distance  to  nearest  Canal  terminal  by  usual  routes,  in  navtlMl 
mllea^  from  following  ports  (length  of  " 


Montreal.  Can   3,160 

Halifax,  N.  S.    2,317 

PiurtUuUU  ]f«.    2;m 

Boston,  Mass   j;iS7 

New  York,  N.  Y   tjff4 

Philadelphia.  Pa.  

Bftlttnore,  Md.  

Norfolk.  Va.    i,|7f 

Wilmington,,  N.  C.   1,730 

Charleston,  a  G.    1,564 

fltoVMUUth,  Ga.    1,607 

JMksoiiTiUe,  Fla.   i,SfS 

X«J  West,  Plm,  .\.  1,065 

Mobile,  Ala.    1,393 

New  Orleans,  La.    i,403 

GAlTeStOB,    TtK.    1,493 

Tampico,  Mexico   i,485 

Tuxpam,  Mexico    1,455 

Vera  Crus,  Mexico   1,420 

Bellse,  British  Honduras  . .  816 
Puerto  Barrios, 
Truxlllo,  Honduras  . 

Blueflelds,  Nicaragua   27C 

Port  Limon,  Costa  Rica  ..  191 

Boeas  M  Tvn,  Vmammm  144 

Havana,  Cuba  ••••••••••••  1,003 

Bermuda  Islands    1,643 

Kingston,  Jamaica   851 

Port  ma  Priaes,  BattI   774 


San  Jnaa.  Porto  Rloo 

St.  Thomas,  Virgin 
Barbados,  West  Indies  . 
Port  of  Spain,  Trinidad 


993 

1.029 
1,237 
1,159 


Canal,  34  nautical  milss): 

La  Guayra,  Venezuela  ....  841 

Georgetown.  British  Guiana  1,535 

Paramaribo*  Dutch  Guiana  1,648 

Pwru*  BnMH    2.374 

Pmambuoo,  Brusn    i,4» 

Rio  de  Janeiro,  Brasil  4,349 

Buenos  Ay  res,  Argentina..  5.450 

Ascension  Island   4^12 

St.  Beleaa  Mtm€  •••   4^ 

Cape  Town.  Africa   6374 

Monrovia,  Liberia    4,148 

Vfe«etown.  Sierra  Leone  . . .  3,983 

«t  VlBosnt,  a  T.  1.   3,268 

Funchal,  Ma4slfS    3JS9 

Fayal,  Azores    3^88 

Gibraltar  (Strait)    4,343 

Mansillsfl,  Vtaace    5.036 

Genoa,  Italy    §jo» 

Naples,  Italy    5,325 

Constantinople,  Turkey  ..  6,166 

Odessa,  Russia   6,509 

Pwrt  Said,  mmt   CMS 

Lisbon,  Portugal   4,205 

Bordeaux.  Francs  .........  4,598 

Havre  France   4,610 

B»a^99m  RsdK,  80UI7  Island  4,356 

Liverpool.  England   4kS4S 

Glasgow,  Scotland    4,492 

Plymouth.  England   4,455 

t^ftudon.  Bnirlsad   4,763 

Aatwerp  Belgium  ...«   4J98 

Amsterdam,  Holland   4,832 

Hamburg,  Germany    5,070 

Denmark  ....  5.350 

»••••••  Sis87 


418 


APPENDIX 


PANAMA  CANAL  TRAFFIC  (Contfamad) 
nmAVOM  nuNB  pamma.  OATtAii  TO  cHnar  ports  of  thb 

WVMUJI 

Distances  to  nearest  Canal  terminal  by  usual  routes*  in  nautical 
miles,  from  following  ports  (Isafftli  of  Caaal*  J4  nautical  milss): 


Stockholm,  Sweden   5397 

Petrograd,  Russia    6,282 

Bergen,  Norway    5,295 

Archangel,  Russia    6.900 

Sitka,  Alaska    4,547 

Vancouver,  B.  CS,    4,032 

Seattle,  Wash   4.021 

Port  Townsend,  Wash.   3.985 

Astoria,  Ore.      3,77s 

Portland,  Ore   3,869 

San  Francisco,  Cal   3,245 

Los  Angeles,  CaL    2,913 

■sa  Dievo,  CaL   2,843 

Magdalena  Bay,  Mexico  ..  2,265 

Mazatan,  Mexico    2,006 

Acapulco,  Mexico    1,426 

Salina  Cms,  Mexico    1,170 

San  Jose,  Guatemala   tt6 

La  Union,  Salvador   748 

Amapala,  Honduras  ......  745 

Corinto,  Nicaragua    683 

Puntarenas,  Oosta  Rica  ..  471 

Pedregal,  Panama    243 

Buenaventura,  Colombia  ..  356 

Guayaquil.  Ecuador    793 

Callao,  Peru   l,34« 

Iquiqas,  dOto   un 


Antofasasta.  Chile   2,140 

Valparaiso.  Chile   2,616 

Coronel,  Cliile    2,822 

Punta  Arenas,  Chile    3,943 

Gape  Horn,  Chile    4,260 

Galapagos  Islands   864 

Marquesas  Islands    3,826 

Christmas  Islands    4,752 

HoBolvltt,  Hawaii    4.685 

Midway  Islands    5,707 

Yokohama,  Japan    7,682 

Vladivostok,  Siberia    7,833 

Shanghai,  China    8,556 

Hongkong.  China    9,19S 

Manila  P.  1   9,347 

Singapore,  S.  S   10.505 

Batavia,  Java    10,610 

Port  Apra,  Guam   7,98? 

Caroline  Islands  (Ponape)  7,321 

Marshall  Islands   7,041 

Fiji  Islands  (Levuka)   6»288 

Samoa  (Apia)    5,710 

Tahiti,  Society  Islands  ....  4,486 

Sydney,  Australia    7,674 

Melboanis»  Australia   a^lSS 

WslimgtOB.        msaland  .  6i»S0S 


413 


APPENDIX 


FOREICN  WEIGHTS  AND  MBA8USB8 


Almud«   


Arobe  

Arratel  or  libra 
Arroba  (dry)  .. 


Arroba  (liquid) 


AnhlM  (■«.) 
Altai  


•  •••••••••••••• 

Berkovets   

Boll,  or  Bole  


•••••••••••••« 


Where  Used 
Portugal 
finrpt 


••••«• «• • • • < 


Metris 


Portugral   

Argentine  Republic 

Brazil  

Cuba   

Fwtasml  

Spain   

Venezuela  

Cuba,  Spain  and 
Venezuela   


Bu   

Butt  (wine) 


Cantar 


••••■•••(•••••••I 


>  •  •  •  • 


•  •••  • 


Cantaro  (cantar) 
Carga   


Centaro 


•••••••••••••••••I 


••••••••••••• ••• 

•••••••••••••• 

>■••••••••••••• 

•••••••••••••< 

•  ••••••••  • • • • 

•  ••••••••  • • • « ••• 

•  ••••••••••••••• 


•  •  •  •  •  I 


••••••••••••••• 


••••••••• ••••• 

•••••••«•  •••  •! 

•  ••••••••••••• 


Chetvert 
Cbih 


Comb 
Coyan 


Morocco 
Argrentino  Republlo  and 

Mexico   

Malte  (enatoms)  .. 
Spain  (rmlaina)  .... 

Russia   

Scotland,  Ireland  . 
India  . 
Sumatra 
Japan 

Spain   

Malta   

India  (Bombay) 
India  (Madras) 

Egypt   

Morocco  

Syria  (Damasevs) 
Turkey  .»«»»»»,,..,,,,,, 

Malta   

Mexico.  Salvador 


>••■••• 


•  •  •••  •  •  »  »  • 


China 
Japan 

Java.  Siam.  Malacca  . . . . 


••••••••••••••••• 


•  •    •  •  I 


• •••••• 


Central  America 
Bremen,  Bmaawick 

Darmstadt   

Danmark.  Norway  . 
Nvrombary 
Prussia  ... 
Sweden  . . . 
Vienna 
ZollTarain 

Doubla  or  BMtrlo  

Russia  

China  

Japan  •••••••••••••.•«« 

Engrland 

Sarawak  

Siam  (Koyon)  


Amarioan  ManimlMitt 

4,422  gals. 

7.6907  bu.;  and,  at  Cairo, 
it  equals  4.92  Imp.  bu^ 
or  S.07  Winch'r  bu. 

0.03471  aera. 

25  lbs. 

1.011  lbs. 

25.3175  lbs. 

32.38  lbs. 

25.3664  lbs. 

32Jt  Iba. 

aiMlba. 

3S.4034  Iba. 

4.263  gala. 
28  in. 

S.44a«.  ft 
i.ia  Iba. 


20.0787  gals. 

11.4  gals. 
100  Iba. 
J61.12  Iba. 

4  Winchr  bn. 
832  grains 
7.0M.f  ao.  matara 
0.1  inch 

140  gals. 
5.4  gals. 

sat  Iba. 

500  lbs. 

99.05  Iba.  mw, 
113  lbs. 
m  Iba. 

124.7036  Iba 

175  lbs. 
300  lbs. 

1.1331    lbs.;    at  treaty 
Portap  l.JHlba. 
1.31  Iba. 
1.35  lbs. 
2.12  lbs. 
4L3631  sala. 
117.5  lbs. 
110.24  lbs. 
110.11  lbs. 
111.41  Iba. 
113.44  Iba. 

93.7  lbs. 
123.5  lbs. 
110.24  Iba. 
220.46  Iba. 
5.7748  bn. 
14  inches 
2.4507  acres 
4  bo. 
3.098  lbs. 


414 


APPENDIX 


FOREIGN  WBIQHT8  AND  MEASURES  (Continued) 


Cnadra 


Cabio  meter  

Cart,  (hondredweiglit) 
Deaaittifia  


Drachme  . . . 
Fanega  (dry) 


Wlim  Uaaa 

Arsantina  RapnbUe  . . 

.  Paraguay   

Paraguay  (aii.)   

Uruguay   

Metric   

Brttiah   

Russia  

Spain   

Greece   

Central  America   , 

Chill  

(Tuba   


(Uaaid) 

Feddan   

Frail  (raisins)  . 


•  •••••• 


Frasila 
Fuder  . 


)....... 


•  •••••••«•••• .  < 


Gamioa 

Oram  .. 
Hectare 

Haetoliter:  Dry 

Liquid  

Joch  

Ken   

Kilogram  (kilo)  ... 
Kilomatar 

Klafter  

Koku  , 
Korree 


Uruguay  (double) 
Uruguay  (single) 


Spain  

Egypt   ][ 

Spain  V.'.l 

Argentina  Republic  . . . 
Mexico  . 
Zanzibar 
Luxemburg  .... 

Ruaaia   

Russian  Poland 

Metric  , 

Metric  


Last 

M 


.«•••. ....I 
••••••••»••... 

••••••••.....a. 


e  (land) 


LI 

Libra  (lb.) 


>••••.  •■•  • .  • 


Austria 
Japan 
Metric 

M 


••••••••••.< 


•  ..aa.aaa...,,,,.  , 


.  ■ 


.............. 

'•••••••aa...a..4 


Rnaaia 

Japan 
Russia 

''I'an   

Belgium.  Holland  

England  (dry  auat)  ... 

^rmAuy   



RttMian  Poland  .  a . 

Scotland,  Ireland  . 
Spain  (salt) 
Paraguay  .. 

•••  

Argentine  Repablio  .... 

Central  America  

Chili  

Cnba 

MeZiOO  aa.. 

Peru   

Portugal  . . 

Spain   

Uruguay 


.....i.... 


•••........a 

I.  ......a.... 

...aa....a.i 

•..•....aa.< 

*.•......... 


»••••••. aaa.... 

••••••••••••*... 

••••....«...« 


Awariean  Xquivalaats 
.  4.2  aoraa 
78.9  yaida 
8.077  aq,  ft. 
Nearly  2  acraa 
35.3  cu.  ft. 
112  lbs. 
2.6997  acraa 
1.599  bu. 
Half  ounce 
1.5745  bu. 
2.575  bu. 
1.599  bu. 
1.S4728  bu. 

Strlka  fanega,  70  Ib&s 
full  fanega.  US  iba^ 

.  .....  7.776  bu. 

3.888  bu. 
1.599  bu. 
16  gala. 
1.03  acraa 
50  lbs. 
2.5096  qte. 
2.5  qts. 
35  lbs. 
264.17  gals. 
0.9028  lbs. 
0.88  gal. 
15.432  grains 
2.471  acres 
2,838  bu. 
26,417  gals. 
1.422  aorea 
6  feet 
2.2046  lbs. 
0.621376  mile 
216  en.  ft 

4.9629  Imp.  bu. 
3.5  bu. 
8.28  lbs. 
86.134  bUa 

82.52  bu. 

2  metric  tona  (4480  Iba.) 

112.29  bu. 
Hi  bu. 
10  Quartwa 
4,760  lbs. 
4.633  acres 
2,115  ft. 
1.0127  Iba. 
1.043  lbs. 
1.014  lbs. 
1.0161  lbs. 
1.0146S  Iba. 

1.0143  Iba. 
1.011  lbs. 

1.0144  lbs. 
t.0143  lbs.. 
tMU  Iba. 


415 


APPENDIX 


FORBION  WBIQHT8  AND  MBASURBS  (Comiinwd) 


lAtmr   

lilm  (11>.> 


Load 


Jklarc  . 
Maund 
Mmtw 


Mil   

Milla  .... 


»«....«•••< 
>•••••••••• 


Ocque 
Oke  . 


Pio  .. 


M 

Pik 


(lb> 


Quintal 


Salm  

Se   

Seer  

nuilra  

Sho   

Standard  (Petroffrad) 

Stone  

8tt«rt«   

Sun   

SiMl  •  ••••••••••• 


Metric  

Greece   

Guiana   

England  (timber) 


Costa  Blea  

Nicaracva» Salvador  .... 

Boliva   

India   

Matrte   

Denmark  

Denmark  (greogrraphical 
Nicaragua  and  Honduraf 
Oraaoa   


Greece 

Bffypt 

Oraaca 


Turkey  .... 
Hungary  and  Wallachia 

Egypt   

Borneo  and  Oelabas 
China,  Japaa  and 

Sumatra   

Java  

Phllippiaa  lalaiid  .. 
Arerentlaa  Bayabllo 

Spain   

Turkey   

Rvaala  

Denmark  and 

Great  Britain  

London  (coal)  .  ^ . 
Arsaatlne  Rairabllc 

Brazil   

Gaatile,    Chill,  Maxlcoj 

and  Peru   

Oreece   

Nawf mmdlaad  (M) 

Paragraar   ••••• 

Syria   

Metric  


Syria  ... 
BniUaad 


Malta 
Japan 
India 


Lumber 
Britiih  . 
Vrugxtrnj 

Japan  . . 


Amerieaa  BqalialMits 

1.0567  qaaria 
1.1  iba. 
1.0791  IbB. 

Sq.  50  cu.  fL;  unhewn, 
40  aa.  its  iatfh  plaaka, 
60t  aaparMal  ft 

1  5-6  acres 
1.727  acrea 
9.507  lb. 
83  3-7  Iba. 
39.37  Inchea. 
4.68  miles 
.61  miles 
1.14ft  auiaa 

3.3069  Ika.  aT. 
0.63  acre 
2.84  lb.  av. 
3.1053  Iba. 
2.84  Iba. 
3.0817  lbs. 
2.82838  lbs. 
2.5  pints 
211 


133i  lbs. 
13S.1  lbs. 

137.9  lbs 
0.91407  foot 
0.9479  foot 

37.9  iaehsa 
36.112  Iba. 
1.102  lbs. 
8.252  bu. 
36  bu. 
101.43  Iba. 


101.41  Iba. 
133  J  Iba. 
112  lbs. 
100  lbs. 
125  lbs. 
22a46  Iba. 

6  Iba. 
51  lbs. 

4  bu.  of  flour,  it  is  480 
lbs. 

7  feat 

490  lbs. 
0.02451  acre 
1  lb.  13  OSS. 

11.9I0S  taabaa 

1.6  quarts 
165  cu.  ft. 
14  lbs. 

3,700  cuad.  (see  cuadra) 
1.193  iaebes 


41$ 


UNITED  STATES  EXPORTS— DOMESTIC  AND  FOREIGN 


1810..  42,366,675  24.791,295  66,757,970 

1820..     51,683.640  18,008,029  69.691,669 

1830..     58,524.878  13,145,857  71,670,735 

lt40..  111,660,561  12,00M71  123,668.932 

Um..  lJ4k900,233   9,475,493  144.375,726 

ltSI««  192,751,135  26,158,368  218,909,503 

I860..  316.242,423  17.333,634  333,576,057 

1861..  204,899,616  14,654,217  219,553,833 

laO..  m<44,iM  11,MC477  IfM^MOl 

1863..  186,003,912  17,960,535  203.964,447 

1864..  143,504.027  15,333.961  158.837.988 

186S..  136,940,248  29,089,055  166,029,303 

laii..  SS741S4a2  11.341.420  I4M59,522 

IMI..  279,784m  14,719,332  294»506,141 

1868..  269.389.900  12.562,999  281.952,899 

1869..  275,166,697  10.951,000  286.117,697 

1870..  376.616,473  16^155,295  392,771.768 

Un.«  4lt,39M0t  14,421,27t  442,M17t 

1872..  428.487,131  15,690.455  444.177.586 

1873..  505,033,439  17.446.483  522,479.922 

1874..  569,433,421  16,489,619  586.283.040 

mS..  499,284,100  14.158,611  513,442,711 

1876..  525.582,247  14.802.424  540,384.671 

1877..  589.670.224  12,804.996  602,475.220 

1878..  680.709.268  14.156.498  694.865,766 

1879..  898,340,790  12.098,651  710,439.441 

1888..  183,f48,3S»  lMi2,38S  88S4I8.858 

1881..  883,925,947  18,451.399  902.377.346 

1882..  733,239,732  17.302,525  750.542,257 

1883..  804,223,632  19.615.770  823,839.402 

18B8..  m9i4,8S2  15,548,787  y48iS13,609 

IM8..  laMHiMi  1M88JB»  MM88.7SS 


Fiscal 

T«ur.  PoBwrtle.  FMIga.  Tvtid. 

1888..  889,964329  13^888,381  879,524^818 

1887..  .703,022.923  13.160.288  716.183,211 
1888..  683,862,104  12,092,403  695.954.507 
1889..  730.282,600  12,118.766  742,401,375 
1890..  845,293,828  12,534358  857,828,084 
1891..  872,270288  12,210,527  884,480.810 
1892.. 1,015,732.011  14,546.137  1.030.278,148 
1893..  831,030,785  16,634,409  847,665,194 
1894..  869,204.937  22,935,635  892.140.572 
1895..  993,392499  14^145,588  807438,165 
1896..  863,200.487  19.406,451  882.606.938 
1897..  1,032.007.603  18.985,953  1,050,993,556 
1898..  1,210,291,913  21,190,417  1,231,482,330 
1899.. 1483481422  83482,080  1427423489 
1900..  1470,763,571  23,719,511  1,394,483.082 
1901..  1,460,462.806  27,302.185  1,487,764,991 
1902..  1.355.481.861  26.237.540  1.381.719,401 
1903..  1,392,231,302  27,910,377  1,420.141,679 
1904.. 1,435,179^017  21448454  1,460,827471 
1905..  1,491.744.641  26.817,025  1.518,561,666 
1906.. 1.717,953.382  25,911.118  1.743,864,500 
1907..  1,853,7 18,034  27,133.044  1,880,851,078 
1908.. 1434,786,357  25486,989  1480473448 
1909..  1.638.355, 593  24.655.511  1.663,011.104 
1910..  1,710.083.998  34,900,722  1,744,984,720 
1911.. 2.013,549.025  35.771.174  2.049,320,199 

1912.  .2,170419,828  34,002,581  2404,322.409 

1913.  .8,428406458  87477,791  8485484.149 
1914.. 2.329,684.025  34.895,123  2,364,579,148 
1915.. 2,716,178,465  52.410,875  2,768.589,340 

1916.  .4472.177.579  61,305.306  4.333,482.885 

1917.  .8427.164450  62484,344  6490^048494 
1918..S4l74S»47t  8U3S4il  Iit8^88i44l 


Figrurea  f  jr  exports  include  grold  and  silver  prior  to  1830 
Total  exports  per  capita  of  population— >( 1800),  |13.37;  (1810),  $9.22; 
C1820),  8742;  (1830),  81S7;  (1848>,  8725;  (1850),  $848;  (1888>,  |t8L8l;  (toyo), 
89.77;    (1880).    $16.43;    (188t>,   tUM;    (t888K    81748;    C1918>.  81848s 
(1916).  814.33;  (1917).  $54.82. 

The  relative  percentage  of  the  variow  WmiB  of  doOMstic  exports  in 
th«  ymt  eaded  l«a«  88^  nu,  wtm  M  fello'wt:  Oititf*  mtttortals  tor  wm  te 
manufacturlnir,  15.35;  foodstuffs  la  crude  condition,  asd  food  «^«iTpftit^ 
6.42;  foodstuffs,  partly  or  wholly  manufactured.  19.73;  manufactures  for 
further  use  in  manufacturini^  20^9;  manufactureo  ready  for  d^ntumpttoiy 
8747;  misoellaneous,  0.44. 


418 


APPENDIX 


THBPURCHA8INQ  POPULATION  OF  VARIOUS  COUMTRIBS 


The  estimates  of  the  urban  population  in  South  America,  Central 
America,  and  some  of  the  other  important  markets  tabulated  with  the 
idea  that  to  the  averaco  Amortean  manqf8ot«rer  those  llsures  giw  a 
hotter  ladleatioa  of  the  oztont  of  the  purehasinv  market  than  aay  other 
sinslo  olaas  of  popvlatioii  ficvros.  Tho  fl8:«roo  hero  gtwmk  for  urban  pop- 
ulation are  only  approximate.  They  were  prepared  by  Dr.  BL  IL  Pratt 
for  the  Department  of  Foreisa  and  Domestic  Commerce. 


Urban 

Imports 

Total 

(purchasing)  Total 

from  United 

Ck>nn  tries 

population 

population 

imports 

Mates 

Bovfli  Amorloa: 

3.880,000 

|40M0S,000 

889^882,099 

214,000 

21.358,000 

1,900.000 

2,953,000 

326,865.000 

51.358,000 

Chile   

986,000 

120,274.000 

20.089.000 

5,473,000 

545.000 

26,987,000 

7.630.000 

81S.000 

11,653,000 

2,764,000 

201,000 

8,120^000 

488^011 

881,000 

29,631,000 

8^542,000 

442.000 

50,666,000 

6.300.001 

343,000 

17,005,000 

6.158,000 

8,880,000 

1,018,364,000 

166,091.000 

OsBtral  Amorloa: 

57tHrta  Bloa  •••••• 

88,000 

8,885,008 

4.488»080 

204,000 

10,062,000 

5,053,000 

107,000 

5,133,000 

3.464.000 

690,000 

240,000 

5,768,000 

3,244.000 

81,000 

9,872,000 

5,413,000 

198.000 

6,167,000 

2.490,000 

3 


89^008 

48487,800 

34,132,000 

liatin  America,  other: 

•  • 

2,474.000 

1,026.000 

133,975.000 

71.380,000 

y 

Haiti   

2,500,000 

165,000 

10,935,000 

6.499,000 

16,446,000 

1,693,000 

93,020.000 

44.510,000 

S 

Donlnlean  Rep.  ... 

735,000 

72,000 

9,272,000 

5,769,000 

31,145,800 

3,958^000 

247,302,000 

138^158.000 

336,042.000 

o7,774,300 

427.406,000 

25.826,000 

1 

52,985,000 

8,300,000 

363,257,000 

60,959,000 

315,133,000 

29,748,000 

594.521.000 

15,544,000 

5,044.000 

2,417,000 

388,102,000 

46,342,000 

British  Sovth  Africa  .. 

5,973,000 

c33 1.000 

187.489.000 

17.851.000 

167,920.000 

24.157,000 

603.463,000 

45,026,000 

L 

20,600.000 

3.507,000 

193,024,000 

5,280,000 

1,152.000 

426,000 

108,466,000 

10,259.000 

11,887,000 

1,540,000 

187,738.000 

2,596,000 

a  Estimated  population  of  45  treaty  ports  in  1912.    The  total  foreign 
population  of  China  in  1912  was  145,000. 
8  Total  population.  1914;  pnrehaainoT  population.  1908. 
e  White  popnlatioa  in  otttos.  Tottf  popviatloa  of  niropoaaa,  I478j888i 


419 


APPENDIX 


LASOEtT  CmX8  OF  THB  BARTH 


ladlcate  th« 


d«t«  of  th*  oMMiw  or  ollletaa 


Cities  Population 

Now  York  (1917)   5,737,492 

London    4,522,964 

BMrl%  VnuMO  (1911)  MtMOO 

Toklo,  Japan  (1908)   2,186,000 

Chicagro,  U.  S.  A.  (1910)..  2,185,000 
Berlin,  Prussia  (1910)....  2,071,000 
VloBiia,  A«atrt»  (1910)....  2,031,000 
Petrogrrad,  Russia  (1910).  1,908,000 
Phila.  U.  S.  A.  (1910)....  1,550.000 
Moscow,  Russia  (1909)...  1,481,000 

CSantoB,  Chintk   1,250,000 

Osaka,  Japan  (1906)  1^07,000 

Rio  De  JaBoli%  BrssU 

(1910)   1,130,000 

BaoBoo  Ayroa  (1905)   1,026,000 

Calcutta,  Indlaaa  (1911).  l;m,000 

Peking,  China  .1,000,000 

Bombay,  India  (1911)   980,000 

Btemburff,  Ger.  (1910)....  931,000 

Btokow,  (3iliia    ^,000 

Budapest,  Hun».  (1910)  880,000 

Tientsin,  China   550,000 

BUminsham,  Kng.  (1911)  840,000 
Glaasow,  SeoOaad  (1911)  786,000 
Warsaw,  Poland  (1909)  781,000 
Liverpool.  Engr.  (1911)  ...  748,000 

Naples,  Italy  (1911)   723,000 

Itaaoh— lor.  Wag.  (I9ii>  .  716,000 

St.  a  A.  (itii)  mjm 


Cities  Population 

Boston,  U.  S.  A.  (1910).,,  <71,000 

Cairo,  Barypt  (1907)    654,000 

MratTMO,  Canada   650,000 

Fnehow,  China    iSIMNO 

Sydney,  N.S.Wales  (1911)  ^l/NO 

Shanghai,  China    4S9,00t 

Bangkok,  Siam  (1909)....  OQ^OOO 

CnimiffklBv,  C^iaa   600,000 

Milan,  Italy  (1911)    3^,000 

Madrid,  Spain  (1910)  ....  598,000 

Munich,  Bavaria  (1910)..  596,000 

MUhovnM.  Via  (1911)...  594,000 

Leipzig,  fluoBF  (1910)..  190,000 

Barcelona,  Spain  (1910)..  587,000 

Amsterdam,  Neth.  (1909)  568,000 

Cleveland  U.  S.  A.  (1910)  561,000 

Copohaam,  Don.  (1911).  SS9,000 

Baltimore,  U..  S.  A.  (1910)  558,000 

Marseilles.  France  (1911)  551,000 

Droadon,  Saxony  (1910)..  548,000 

Bomo,  Italy,  (1911)   519,000 

Pittsburgh,  U.S.A.  (1910)  134,000 

Lyons,  Prance  (1911)  524,000 

Madraa,  India  (1911)  520,000 

(Solocno,  PniMla  (1910)..  517.000 

Breslin,  Prussia  (1910)  ..  S13,000 

Hyderabad,  India  (1911>..  500,000 

Suchow,  China  •••,«••••••  50(^000 


490 


APPENDIX 


FOBEIQK  COMMBBCB  OF  THB  UNITSD  8TATB8 

A  QBNBRAL  SUMMARY 


Fiscal 
Tear 


Tot.  Imports 
and  £!xporta 
DoUan 

  ia,3M,S4t 

1810    152.157,970 

1820    144,141,669 

1830    134,391,691 

1840    a21,927,Mt 

INO   31630S,2S2 

1855    476.718,211 

1860    687,192,176 

1861    506,864,375 

1060    J00W.178 

1863    447.300.262 

1864    475,285,291 

1865    404,774,883 

1066    m,671,i80 

1867    690,267,237 

1868    639,389,339 

1869    703.624,076 

1870    028,730,176 

1871   963,043.862 

1872   1,070,772,663 

1873  ••.   1,164,616,132 

1074  M. >....*•  1,153,689,382 

1875   1,046,448,147 

1876    1,001,125.861 

1877    1,053,798.346 

1878  •.......*.«•••<•••  1,131,917,298 

1079    1,156,317,216 

1880    1,503,593,404 

1881    1,545,041,974 

1882  ......•..•*•••.•*.  1(475,181,831 

lOOS  •   1,547,030,316 

1884    1.408,211,302 

1881   «  M19.717,084 


Fiscal 
Year 


Tot.  Imports 
and  £«xporta 
Dollars 

1806    1.314.960,966 

1887    1.408,502,979 

1888    1,419,911,621 

1889    1,487,533,027 

1890    1,647,139,093 

1891    1.729.397.006 

1892    1.857,680,610 

1893   1,714,066,116 

1094  ....••....*.. .. « ..  1,547,135,194 
1196   1,539.508,130 

1896    1,662,331,612 

1897    1,815.723.968 

1898    1,847,531,984 

1899  .............. . « *  1.924,171,791 

1900   ;  2.244.424.266 

1901   2,310,937,156 

1902    2,285,040,349 

1903   2.445.860.916 

1904    2,451.914.642 

1905    2.636,074.737 

1906    2,970,426,946 

1907    3.315,272.503 

1908   3,055,115,130 

1909   2.974.931,328 

1910    3.301,932,150 

1911    3.576.546,304 

1912  ..................  3,857, 58T, 343 

1913    4.278.892,383 

1914    4,258,504,805 

1915  .......M*. ........  4,442,759,085 

1916   6,531,366^ 

1917    8,949,403,579 

1918   0,874.345,044 


m 


APPENDIX 


CABLE  SATES  FROM  NEW  YORK  TO  WORLD'S  PRINCIPAL 

CITIES 


Ber  Word 

AbFMiittia  10.64 

Algeria  32 

Alexandria  (Snrpt)  50 

Antigua   35 

Arsrentina   so 

Attvtria   32 

Barbados  35 

Balgium   25 

Bermuda   42 

Bolivia   50 

BraaU   7©  to  U6 

Bulgaria  ^  m 

Burmah  ,  .55 

Callao  (Peru)   50 

diro  (Enrpt)   ^   [so 

Colony  (a  AL)   M 

CStrlon   66 

CihllO   50 

-ChitUk    1.22 

CochiB,  China  ,   j99 

Colon    j0 

Cyprus   50 

Demerara  35 

]>«iiiiiark   35  I 

Xcuador   .so 

England   2S 

France   25 

Gloimaiiy  25 

Gibraltar  ^   .43 

Greece   35 

Guatemala   49 

Bavana   is  I 

Hayti  M  to  fUO 

Holland   .25  I 

Honolulu   ,,,,   .37  I 

Hungary   32  I 

^Efl^^i^llftfli^ft     V##VV9##t##CW4)  #0##t0##9  I 

Ml*    M 

Ireland   25  ' 

Italy   31 

Jamaica    ,36 

'•P«i  UJ 

JRWIk   ••^••••••••a •••••••••«••»,»  1*00 


Btr  Word 

Korea  (Sooul)   1.33 

Malta   35 

Martinque   ^5 

I  Mataaaas   iiili!!!!  Ji 

j  Melbourne,  Vic  ,   ^ 

I  Natal  (So.  Africa)   ....!!!*!*  M 

I  New  South  Wales    m 

New  ft— land   j$ 

Norway   jj 

Orange  River  Colony   M 

j  Panama   30 

I  PMmvnay  50 

I  Penanc  ••••••   34 

I  Peru   50 

I  Philippine  Islands,  Manila...  l!i2 

I    Other  olBoea   1.17  to  l.JO 

I  Porto  Rico    4f 

I  Portugal   ^  

1  Queensland   .,|* 

I  Bonmania   ,U 

Bnairia  (Surone)   ,4$ 

Russia  (Asia)   ,  ,43 

Santo  Domingo   ,,,,  *Jo 

Scotland    ^5 

 .34 

Slaa  

Sicily   ^  

Singapore   ]]]  .94 

8P»*n  38 

St.  Thmaaa   j§ 

Sweden   ^ 

Switzerland   30 

Sydney  (N.  a  W.)   ,  \^ 

Tander    j$ 

Tasmania   j§ 

Transvaal    %§ 

Trinidad   ],  .35 

Twrkey  (Borope)   36 

Turkey  (Jjrta)    ,4$ 

Uruguay   50 

Venesuela   1.00 

Vera  Cms   $1.75.  10  wds. 

▼letoria  (▲ttatralla)  ^  $$ 


Tk&m  imtM  are  subject  to  oh»ikgt. 


INDEX 


ABROAD^Finaneiiigf  salM^  188; 

Work  of  selling  140. 
Acceptance — Discounting,  300; 

DiwoiiDtiiig  bftnk,  288. 
AooODHT^CQllection   of,  196; 

Guariirtwiiic  187;  Ingarmg^ 

181. 

Address— Legibility  of,  67. 

Advertising — American  use  of, 
74;  Amomit  of,  75;  Ddeting 
of,  81;  Experience  in,  75;  Ex- 
tension of,  74;  Good  judgment 
in  foreign,  79;  Increased  re- 
ceipts for,  79;  Importance  of, 
18;  Knowledge  of,  74;  Meth- 
ods of  foaraign,  74;  Necessi^ 
of  consumer,  78;  Planning, 
75;  Policy  of,  75;  Power  of, 
83;  Purposes  of,  74;  Rate  for, 
79;  Rides  in  foreign,  83; 
Sharing  charges  of,  117;  Uae 
of,  27 ;  Use  of  stnet  eur  and 
outdoor,  80. 

Agency,  advebtisincs— As  ad- 
visor, 77. 
^AfflWGTy  SlLMiro— Serrioe  of. 

^AoBfor,  ranraai— SorvicM  of, 

94. 

Agencies,  credit,  109. 
acsencies,  joint  selun6,  123. 
Aamcm,  wmcMHrnm  —  Snb- 
SCTiliing  to,  188. 

Agent,  manufacturer's  ex- 
port, 22;  As  middleman,  21. 

Agent,  del  credebg — Commis- 
sion of,  109. 

Agent,  Local  Foreign  Sales — 
Contract  with,  107,  108,  111. 

Agent,   foreign    fbsusht  — 
\  Duty  of,  229. 
HUgint,  merchant — Fimetions 
of,  lie. 

AflBNT,      MANUFACTDHK'S  — 

Functions  of,  97. 
iAgent,  PUBLICITY  —  Functions 
of,  898. 

Agent,  RonNBiT—  AppotntaMnt 


Agent,  «if  Ussfginiw  «C 

107. 

American  Audit  Bureau  <v 

GteCULATION,  76. 

AMBNiiNA---Conmiercial  travel- 
ers in,  46;  Duties  in,  224; 
^Registering  trade  marin  in, 

390. 

Associations  —  Extension  of 
American  Press,  398;  Func- 
tions of  American  Press,  399; 
Types  of  export,  141. 

Australia— Comnierdal  tmfd. 

ers  in,  48. 

^ANKS— Advantages  of  branch, 
806;  Co-operation  of,  127; 
Credit  extended  by,  312;  Es- 
tablishing branch,  305;  For- 
eign departments  in  Amer- 
lean,  292;  List  of  foreign 
Djanches  of  American,  301: 
Metliods  of  German,  126; 
Money  advanced  by,  807; 
Services  of  branch,  310. 

Beixjium  —  Commercial  travel- 
ers in,  45  J  Duties  in,  226. 

otus  OP  Exchange  (see 
5«apts)  —  Accepting,  286; 
Discounting  of  insurance  o£ 
182;  Payment  of,  182. 

Bills  of  Lading— Clauses  in, 
234;  Copies  of,  247;  Date  of, 

52^L?^.  102;  Forms 
of,  234;  Indorsement  of,  284: 
Issuing,  246;  Making  out, 
285;  Negotiability  of,  233: 
Provisions  in,  264. 

BOUVIA— Duties  in,  224;  Taxes 
on  conuaercial  traveUers,  46. 

Branches— Establishment  of. 
27.58;  Executive  in  diarge  oL 

J8|  Locatioii  of.  98;  goeesM  of, 

Brazil— Duties  in,  224;  Mer- 
chants of,  64;  Registering 
teade  marks  in,  390. 

ftOTisH  PooriL  Gans— stu4y 

of,  69. 


423 


424 


INDEX 


BuBKAU  OF  Foreign  and  Do- 
mestic Commerce— Branches 
of,  355;  District  offleei  of, 
853;  Information  supplied  by, 
352;  Object  of,  349;  Re^lar 
publications  of,  351;  Services 
rendered  by,  349;  Special 
boUetins  of,  8S1;  Trade  ofH 
povtnnily  mi  flee  oINnd  nTt 
354. 

Bureaus,  Foreign  Cridit— Es. 
tablishing,  167. 

Bmuv  m  WMtL  Bisk  Inmm^ 
ANOl— EstftUiahment  of,  Ml. 
BusiNBffg  Beiic  prindplet  of, 

160. 

Business,  Export— Co-opera- 
tion for,  130-131:  Creating, 
177,  148,  201,  887,  899;  Es- 
tablishing,  203;  Financing, 
178;  Foundations  for,  331; 
Loss  of,  198;  Methods  in,  204; 

_  Promotion  of,  129. 

Bum — ^Dntj  of  commission 
hofom,  101;  B^vtatkn  of; 
179. 

Cable— Use  of,  30,  143,  146. 

Capital  —  Accessible,  24 ;  De- 
mand for,  829;  Extent  of  ac- 
tivities of,  6;  Need  for,  889; 
Supplying,  330. 

Cargo  (Marine  Insurance)— 
Insurance  of,  190;  Soace  for. 
168. 

GAHnLS— Aethrities    of,  127; 

Character  of,  127;  Classes  of, 
127;  Creation  of,  123;  Growth 
of,  126;  Importance  of,  123; 
Information  obtained  by,  128. 

CataX4»dm — Appearance  of, 
84;  Appreciation  of,  84;  Ar- 
ticles from,  85;  As  essential 
media,  75;  As  interest  creat- 
ing medium,  84;  Careful 
naiUng  of,  88;  Confidence  in, 
85;  Cost  of,  88;  Destination 
of  export,  83 ;  Discount  sheets 
in,  86;  Discriminate  sending 
of,  88;  Display  by,  84;  Dis- 
tributioii  of,  86;  Duty  of,  88; 
fisq^nations  with,  86;  Fnc- 
tions  of,  86;  Half  tone  cuts 
in,  85;  Importance  of,  84; 
Information  in,  86;  Language 
of,  88,  84;  MaUnflr  np  foreign 
84;  Packing,  89;  Preparation 
of,  83  Quotations  in.  87. 

Cbntral  Officis  EataUiab" 
ment  of«  116. 


Certificate  of  Origin — Ad- 
vantages of,  239.  y 

Chambm  or  CoMMMPi  -^Hlm^ 
information,  29. 

Checks— ConvmltBot  of  tniT. 
ellers,  43. 

Chile  — Duties  in,  224;  No 
Ueenaes  regoired  47. 

Cbima— Duties  in,  887;  Tnda 
marks  in,  394. 

C.  I.  F. — ^Modern  quotation, 
93,  97. 

OLAimk— GoOoetinf,  199;  Col- 
lectins  marine  insurance,  270; 
Filing  of»   199;  Handling; 

199. 

Clerk,  Shipping — Duty  of,  102. 
Clerk,  Order— Must  have  good  / 

■dMWling,  38.  ^ 
Colombia — Commercial  travoH 

lers  in,  47;  Duties  in,  ^M. 

Combinations — Agreements  of, 
141;  Dealing  with,  129;  De- 
velopment of,  124;  Drawbacks 
of,  128;  Economies  of,  140; 
Entering  into,  116;  Meeting 
128;  Necessity  of,  122;  Pur- 
poses of,  115;  Policy  of  or- 
ganizing, 124.  . ^ 

OomoKai— Statistics  of  fdK 
eign,  115;  Stady  of  nwH 

177.  J 

Commerce    Repobto— Snpi^kir^ 
ments  to,  350.  i 

Commission  —  Protection  of^ 
Federal  Trade,  141;  Sales 

agents,  112. 

Commission  House— Activities 
of  export,  91;  Advantages  of 
azport,  105;  As  indent  mer- 
diant,  21;  As  niddleBBan,  21; 
Buyers  of,  28;  Buyer  for,  98; 
Confidence  in,  95;  Distinction 
of,  91;  Equipment  of,  96; 
Functions  of,  21,  91;  Handl- 
ing order  in,  101;  History  of, 
21;  In  foraign  conunerce,  21; 
Limitations  of,  103;  Lines 
handled  by,  99;  Location  of, 
21,  97;  Orders  executed  by, 
95,  21,  88;  Operation  of,  95; 
Organization  of,  100;  Pay- 
ments to,  96;  Profits  of,  97, 
132;  Publications  of,  80;  Quo- 
tations of,  97;  Salesmen  of, 
100;  ShipoMnti  by, 
Strength  of.  90. 

Company, 
of,  23. 


INDEX 


495 


Company,  Instjbaiiob— Fmie- 

tions  of,  186. 

Company,  Alued — Type,  23. 

Competition — Combating,  114, 
lie,  117,  806,  180;  StilUng, 
128;  Unfair  metboda  ot  118; 
Wastes  of,  140. 

Conditions,  Cumatic  —  How 
they  affect  market,  4.  7. 

Conditions,  Socl/li^  —  Deter- 
wiBaa  diaractap  pf  advaf  Us- 
ing  copy,  82. 

OoNDiTioNs,  Market  —  Knowl- 
edge of,  25,  41. 

Consignee — Symbol  of,  227. 

CoNSiGNMiNi^--Contraetiiig  for, 
246. 

QgeNSULAR  Service  (See  Con- 
suls)— Pay  of,  356;  Person- 
nel of,  356;  Principles  of, 
358;  Safeguarding,  357;  Use 

^  of  ,  858. 

^  OONSULS,  AMflnCAN— Catalog- 
ues for,  88;  Complaints  of, 
67,  83;  Directories  in  offices 
of,  80;  Duties  of,  49,  359; 
EifeetiTeness  of,  357;  Serriees 
of,  lis,  866. 

OoNVENTioN  —  Sixth  National 
Foreign  Trade,  29. 

Copy,  Advertising  (See  Adver- 
tising) —  Keynote  of,  82; 
Kind  of,  81;  Use  of,  81. 

OonMiOlflNDfO^  FOHDCnf  — - 
Blunders  in,  61;  Care  exer- 
cised in  translations  in,  83, 
84;  Courtesy,  59;  Decreasing 
difficulties  of,  59 ;  Economy  of, 
58;  Exporting  through,  59; 
Handling  of,  58;  Importance 
otf  58;  Trade  built  up  1qr» 
58. 

Costa  Rica — Commercial  trav- 
eler in,  47;  Duties  in,  225. 

CODMwni— Aoeoonts  in  for- 
•ign,  200;  Cmnmon  law  group 
in  trade  mark,  892;  Invest- 
ments in  328;  Markets  in, 
128;  Trade  mark  registrations 
in  codeJaw,  888:  With  wbkh 
U.  S.  has  p«PM  post  agfoa- 
ments,  71. 

Cuba— Duties  in,  225;  No 
license  required  in,  47. 

Cubrency— Equivalents  of  for- 
eign, 87;  Knowledge  of  intar- 
national,  87;  MoM  111 
ica,  87. 


Customers — Credits  to  foreign, 
133;  Data  regarding,  170; 
Dealing  with  foreign,  171, 
287;  Insolvency  of,  184; 
Standing  o^  198. 

OBmnuLg-Snhaiitting,  277. 

Qnofp— Adfantages  of  aooept- 

ance,  288;  Amounts  of,  192; 
Asking  for,  186;  Conditions 
of,  280,  286,  287;  Credit,  con- 
firmed, 278,  279.  ,  — 

^^^^^      #  r  ^ 

Cum,  Onof — Confidence  in, 
177. 


p,  Revolvino  — 
ience  of,  282. 

Credit— Extending,  131,  165, 
171,  174,  177,  186;  Form  of, 
281;  Insurance  of,  186;  In- 
Testigating,  187;  Length  of, 
172;  Necessity  of,  174;  Open- 
ing of,  278,  281,  283;  Prob- 
lem of,  163;  Refusing,  161, 
171,  Safe-guarding,  189;  Use 
of  aeoeptance,  288;  Use  of 
commercial  letter  of,  280. 

Credit,  Information  —  Method 
of  obtaining,  165,  60,  101, 
178;  Sources  of,  167. 

Credit  Insurance — Demand  for 
188;  Establishing,  196;  Forms 
of,  192,  189. 

Data— Difficulty  of  obtaining, 

45;  Method  of  obtaining  credit 
169;  Need  of  official,  28. 

Dates — Information  as  to  sail- 
ing, 42. 

jyBJrnBBtas — ^Problems  of,  207. 

Denmark— Consmereial  travel- 
lers in,  45j  Duties  in,  226. 

Directory— Use  of  trade,  68; 
Aim  of,  80;  Destination  of, 
80;  Distribution  of,  80; 
Forms  of  trade;  80;  Names 
from  trade,  88. 

Directosy— Value  of  tal^bone, 

68. 

Discounts— System  of,  142. 

Distances— From  New  York 
City,  71;  TaUe  of,  52. 

DiSTRiBUTiow — Economies  in, 
122;  Expense  in,  125;  MaUi. 
ods  of,  78. 

Documents — Handling  of  ex- 
port, 102;  Requirements  of 
eonanlar,  289. 

Dominican  Repubuc — Commer- 
cial tra^eUem  in,  47. 


426 


INDEX 


Drafts  (see  Bill  of  Ex- 
change—Acceptance  of,  288, 
890;  Bank  takes  poeBeerion  of 
102;  Buying,  293;  Charge  for 
collecting,  291,  295,  296; 
Clauses  in,  296;  Discounting 
of  foreign,  290;  Drawing, 
291,  293;  Finandng,  28; 
Kinds  of,  290;  Meeting,  288; 
Methods  of  pajring,  295;  Ne- 
gotiating, 293;  Quoting  on, 
298;  Payment  of,  105;  Pur- 
chase and  sale  of,  292,  293; 
Stgnatm  on,  894;  DavpiBi; 
5. 

Duty — On  samples,  44;  Agree, 
ing  to  preference,  117. 

Ecuador — Commerdal  trai- 
lers in,  47;  Duties  in,  225. 

Edge  Act— Contents  of,  317; 
Principal  purposes  of,  316; 
TVcrt  od^  818. 

ENTERnaaw  —  InfialiiMiit  in, 

127. 

Europe— Combination  in,  123. 

Exchange  —  Expense  involved 
in,  149;  Rate  of,  143,  197. 

Exporting  —  Careful  haw^Wng 
of,  196;  Selling  methods  in- 
volved in  direct,  17;  Subjed' 

^<rf,  28. 

B»«r  DWiamwHT— Author- 
ity of,  27;  Building  an,  103; 
Establishment  of,  20,  28,  27; 
Executive  in  charge  of,  29; 
Mailing  list  in,  68;  Manager 
of,  31;  Qrganiiation  of,  24. 

Exporter— Intereat  of  America, 
177;  Library  of,  361;  Necess- 
ities of,  104;  Penaliring,  104; 
Privilege  of,  114. 

BaamummB  —  IcKomatic^  66; 
Use  of,  idiomatic,  66. 

Factory— Readjnstmenta  neeea- 

sary,  10. 

Pae  East  Department— Indi- 
▼idual  condiiet  of  ,  98. 

Fees— Data  on  license,  45;  De- 
termining consular,  238;  P*iy« 
ment  of  license,  46. 

FcncN  Branch  Office— Ad- 
}wwitoigeB  of,  99;  Gondnct  of, 
99;  Funcfcleii  iO,  99;  Smr^km 
of,  94. 

Foreign  Fields— Activities  in, 
«82;  Progress  in,  300;  Suc- 
een  in,  188. 

Finance— PrdUcBM  in,  Uitw 

national,  44, 

F.  0.  B.— Shipments,  96. 


Foreign  Branch  —  Establish- 
ment of,  19,  112;  Expenses  of, 
113;  Regulations  of,  113; 
Selling  agency  as,  112;  Stock 
of,  113. 

Foreign    Freight  Fokitard- 

ER— Charges  of,  248. 
Foreign    Trade    Bureau— In- 
vestigations made  by,  115. 
Forwarder— As  middleman,  21. 
Forwarding  Agent  —  Capital 
invested  by,  245;  Clients  of, 
249;  Expenses  borne  by,  246; 
Fimctiona  of,  22,  230,  248. 
244.  245,  249,  261. 
Foreign  Exchange  —  Fluctua- 
^na  oft  31;  Knowledge  of; 

^  Francs— Commercial  trayeOers 

in,  45;  Duties  in,  226. 
Freight— Charges  of,  218;  Quo. 

tations  on  outward,  148. 
^'8^'  ^  ^^■'"•"^issuance  of. 

Goods— Arrival  of,  159;  Care 
of,  245;  Character  of,  145, 
308;  Condition  of,  235;  Con- 
signing, 229;  Damaged,  265: 
Delivery  of,  146;;  Donble 
checking  of.  221;  Dumping 
of,  239;  Paying  for,  163,  179; 
Price  of,  147;  Quality  of,  202; 
Sample  of,  202;  SeUing,  304; 
Shipment  of,  166,  197,  205. 
222;  Terms  of  selling,  161: 
Title  to,  233,  294;  Transpor- 
^  Weight  of,  221, 

Go?irnment  Departunt— To 

teach  foreign  trade,  36. 
Great  Britain — Trade  marks 
used  in,  390. 

CteUDCB— Commercial  travellers 

in,  45. 

Guatemala— Duties  in,  225;  No 
license  required  in,  47. 

Ham  -—  Commercial  travellers 
in,  48. 

History— Knowledge  of,  41. 

Honduras— Commercial  trani- 
lers  in,  48;  Duties  in,  225. 

*^'P*^^S^^n"»ercial  travellers 
m,  46. 

iMPORTHi  — Advantage  to,  98; 

93;  Confidence  in,  163;  In- 
structions from,  215;  Orders 

^jrom,  96;  Settlement  by,  163. 

IlM»«HT— Order  received  by  com- 
MMdoB jMNn^  81;  RepreMots 
order,  81. 


IND£X 


427 


Industry — Export  trade  in  Am- 
erica, 133;  Organization  of, 
129;  Over  production  in,  133. 

iNsmxrnoNS — Difficulties  of 
ibippiiig,  28. 

Insurance — Cost  of,  97;  Ef- 
fecting, 190;  Increasing,  190; 
Placing,  244;  Prepayment  of, 
147;  Safeguard  of,  191;  Sys- 
tem of  domestic  credit,  198; 
Terms  of,  179. 

Investment — Interest  in,  113; 
Problem  of  international,  330. 

Invoice — Completeness  of,  49; 
Difference  in  consular,  287; 
Expenses  enumerated  in,  210 ; 
Features  of,  208 ;  Necessity  of 
consular,  33;  Obtaining  con- 
sular, 236;  Preparing  consular 
239;  Supplementing,  809; 
Value  of,  143. 

Invoicing  Department — ^Func- 
tion of,  102. 

ITALT—- Duties  in,  226;  Regula- 
tions of  doty  on  samples  in, 
45. 

Itinerary — Flexibility  of,  42; 
Importance  of,  42. 

Journal — Character  of  export 
trade,  76;  Circulation  of 
trade,  76;  Subaeribsft  to  ex- 
port trade,  76. 

Journals — Activities  in  Cuba, 
76;  Advertisements  in  export 
trade,  96;  Articles  in  export 
trade,  76;  Circulation  of  ex- 
port trade,  80;  Foreign  local 
periodical,  75;  Importance  of, 
76;  Leaders  among  trade,  77; 
Merits  of  export  trade,  77; 
Status  of  export  trade,  80; 
Study  of  American  foreign 
trade,  19;  Types  of  trade, 
76. 

LanGUAOI  —  Employment  of, 
proper,  64;  Courtesy  in,  62; 
Expert  in  foreign,  39;  Fam- 
iliarity with  foreign,  34; 
Knowledge  of,  30,  41;  Use  of, 
288;  Use  of  commercial,  62; 
Use  of  customer's  own,  83. 

Latin-America  —  Spanish  in, 
64;  Trade  mark  registration 
in,  896;  Trade  prcoleras  in, 
89. 

Litters— Copies  of,  67;  Import, 
ance  of,  43. 

Letterheads — In  Domestic  cor- 
respondence, 68;  Offensive, 
•8. 


Letter  of  Cbsdit — Lesser  cost 

of,  43. 

Letter  of  Introduction — Ne- 
cessity of,  43;  Use  of,  49. 

Ldraby — Necessity  of,  28. 

Loans — Placing,  330;  Sound- 
ness of,  331. 

Machinery — Packing,  220. 

Magazines — Subscribing  to  ex- 
port, 28. 

Maiuno  Lists — ^Foreign  pros- 
pects on,  68;  Trade  Journals 

distributed  to,  76. 
Mails — Frequency  of,  334;  Use 
of,  167. 

Manager — Application  of  do- 
mestic sales,  26;  Authority  of 

branch,  98;  Competency  of 
branch,  93;  Duties  of  foreign 
branch,  99;  Employing  ex- 
port, 26;  Instructions  to  gen- 
eral, 116;  Opportunity  of  ex- 
port, 28. 

Manufacturer  —  Charges 
against  American,  170;  Con- 
fidence in  exporting,  207; 
Foresight  of,  202;  Responsi^ 
bility  of,  231. 

Manufacturers  —Combination 
of,  51;  Co-operation  with, 
131;  Criticism  of  American, 
165;  Quotations  from,  143; 
Beinresenting  American,  116. 

Marine  Insurance — Clauses  in 
254,  258;  Contract  in,  259; 
Cost  of,  93;  Declaring  values 
under,  266;  Fluctuations  of 
rates  in,  145;  General  aver- 
age in,  263;  Kinds  of,  145; 
Obtaining,  96 ;  Particular 
average  in,  264 ;  Principles  of, 
253;  Profit  of,  267;  Protection 
offered  by,  861;  Taking  out, 
261,  102. 

Markets — Agencies  in  foreign, 
132;  American  merchants  in 
foreign,  275;  Character  of, 
77,  78;  Combinations  in  de- 
veloping foreign,  122;  Com- 
peting in  alien,  129;  Condi- 
tions in  foreign,  133;  Con- 
quering, 202;  Control  of,  114; 
Creating,  125,  132;  Demand 
in,  133;  Developing,  124, 
128;  Experimentations  in, 
27;  Locations  in,  111;  Prob- 
lems in,  114;  Review  of,  363; 
Seaidl  for»  168;  Studying, 
164. 


488 


INDEX 


Iteli^Anaylsis  of,  76;  Value 
<tf  Adv«rlisii||rf  77. 

Merchandise  —  Loading,  243 ; 
Quality  of,  122;  Titk  to^  286; 
Weight  of,  223. 
Merchant  Marine — Assistance 
of,  333;  Dmlopment  of,  S47; 
Efficiency  of,  124;  Firtm  of 
American,  344;;  Government 
owned,  346;  Growth  of,  335; 
Hktory  of,  338;  Need  for, 
SM;  Objeet  of,  884:  Drlmto. 
ly  owned,  347;  «^J>^iit  «f 
American,  337. 

MERCHANTS—Activity  of  ex- 
port, 91. 
Mercbants,  ExFORi^—Afl  mid- 
dlemen, 21,  22;  Bona  fide, 
93;  Branch  offices  of,  93; 
Business  of,  92,  97;  Location 
of,  82;  Original  policy  of, 
91;  Proilti  0f,  188;  PnrdiMe 
of,  94. 

Metric  System  —  Familiarity 

with,  33. 

li^DOOO— Ckimmerdal  travelers 
in,  48;  Dn^  in,  288. 

UnmuatMH  —  VwMmm  0L 

90. 

Motion  Pictures  ^  American 
industry  viaualized  by,  81: 
As  essential  media,  75;  Fiela 
for,  81;  Successful,  81. 
-^National    Foreign  Tradb 

Council— Reports  of,  28. 
^  Netherlands  —  Commercial 
trainiin  in,  45;  Duties  in, 
226. 

Newspapers  —  Kinds  of,  Ws 
Use  0^  78;  Use  of  ta«%n. 

New  &UL41ID  —  Commercial 
travelen  in,  i9. 

V  NlCARAGUA^-Commercial  trav- 
elers in,  48;  Duties  in,  225. 

Norway— Duties  in,  226;  Trad- 
fng  lieenee  zequired  in,  45. 

OmoUL  FoiTAL  Qotdb  I»- 

feirmation  in,  67;  Vahmlile  in- 
formation in,  69. 

Order  Department— Sends  or- 
ders to  factories,  32;  Passes 

_  upon  orders,  88. 

C^WBS— Filling,  204;  Receiv- 
ing, 160,  278;  Accepting,  205; 
AUoting,  137,  141;  Handling 
•o^ort,  205,  206;  Interpreta- 
gpn  ef,  806;  Loss  of,  215; 
BnipMiil  ^  108. 


Organizations  —  Joint  aeUinr. 

141;  Trade,  169.  * 
P^KMW  —  Damaged,  235; 

Handling,  228;  Measurement. 

of,  149;  Sise  of,  888;  Weiglii 

of,  69,  149. 

Packing— Character  of,  218; 
Charge  for,  12,  86;  Contents 
listed  in,  800;  Directing  of, 
28;  Economy  in,  218;  Effic- 
iency in,  216;  Factors  in,  215^ 
221,  False  economy  in,  212; 
Inioranee  of,  218;  Kinds  of, 
822;  Methods  of,  81, 216,  222, 
212,  217;  Negligence  in,  211; 
Poor,  214]  Regulations  in, 
224;  Requirements  of,  213: 
Weight  of  ,  828. 
Panama — Commercial  trindm 

in,  48;  Duties  in,  225. 
Pan-American  Union 
Paraguay— Commercial  travel- 
en  in,  48;  Duties  in,  225. 
Parcel  Post— Advantages  en- 
joyed  by    British  through, 
69;     Advantages     of,  69; 
Agreement  on,  70;  Confer- 
ence on,  69;  Countries  open 
to  ddpment  by,  89;  DiiBeulO- 
ies  in  exporting  by,  70;  Ex- 
tension of,  70;  Foreign  trade 
through,  69;  Markets  reach- 
ed by,  69;  Packing  for,  69; 
Use  of,  69.         •      »  . 

Passports— Importance  of,  48. 
Permit— dauM   in  AitmW 

231. 

PraiJ — Commercial  travelers  in. 

48;  DutiMi  hi,  885b 
PiLFESAOi— Oomfaiir  ifak  of, 

33« 

PopuLATKHf  —  Iniportanee  of; 

POWW  —  Cbaracter  of,  221: 
Charges  at,  145;  Delivery  at 
foreign,  147;  Lociili«iii  ef, 

16. 

Portugal— Duties  in,  226. 
PoBTACai — Cost   of  underpaid. 
67.  ^  ^ 

Prices— Determinlnr  policy  of, 

4;  Intelligent  way  to  quote, 
38;  Meeting  cut,  122;  Method 
of  quoting,  40;  ObUining  low- 
ff^  ■  Quoting,  133,  142, 
150;  Schedule  of,  188. 
Production  —  Economies  in, 
122;  Improvement  oL  187: 
Surplus,  176, 


INDEX 


PUBUCAnoNS  —  Information 
from  foreign,  77;  Leading 
trade,  360;  Standards  of 
trade,  79. 

PUBUdTT— Necessity  of,  898; 
Sdenet  of,  74. 

Quotations  —  Avoiding  c.a.f., 

149;  Efficiency  of  ci.f.,  146; 
Explanation  of  ci.f.,  93; 
Risks  of  f.Q.b,  146;  Steam- 
ship, 148;  InteUigent,  150; 
Limiting;  145;  New  MeOiods 
of  making,  152;  Reforms  on 
making,  152 ;  Use  of  language 
in,  63;  Liability  in,  146. 

BATB&— Changing  freight,  93; 
Filietaation  in  fiei|^  145; 
Infomiation  regarding  postal 
67;  Knowledge  of  insurance, 
148;  Stability  in  exchange, 
163;  Advertising,  77. 

RBdlPTU — C(mtents  of  dock, 
888;  FeatOM  of  parcel,  886. 

BwGSn-— InconpleisnMs  of  for- 
eign credit,  169;  Intemation 
in  credit,  169;  Canpetenee  of 

credit,  168. 

Repubucs  of  Czechoslovakia 
— Trademark  law  in,  898. 

B18K8— Advantages  of  credit, 
80;  AToiding  credit,  110; 
Character  of,  191;  Covering, 
262;  Judging  mercantile,  195. 

Routes — Information  as  to,  42. 

Sailings — Frequency  of,  334. 

Salesman  —  Advantages  of 
eombination,  51 ;  Authority 
of  traveling.  111;  Character 
of  traveling,  111;  Credentials 
of,  42;  Employing,  131;  Ex- 
pense of  traveling,  44,  95; 
Bapevlencsa  of  conbination, 
50;  Functions  of  traveling, 
86 ;  Lines  carried  by  combina- 
tion, 51;  Operations  of,  100; 
Operations  of  combination, 
48;  Opportunities  of,  108; 
Plans  of  combination,  51; 
Preliminary  work  of,  41,  42; 
Propositions  of  combination, 
50;  Qualifications  of  combina- 
tioii,  60;  RespomdMlity  of 
fncwtMng,  36;  Services  of, 
49;  Use  of  traveling,  18; 
Where  to  pend,  80;  Training 
of,  132. 

8ALTAIM»---C|nim«relal  traveler 
ia»  48;  ThOm  fa,  888. 


Samples — ^Data  on  duties  on, 
45;  Expenses  increased  by, 
44. 

Schemes — Questionable  adver- 

tiah^  78. 
Selling— Me^ioda  in,  140;  Sfi- 

tem  of,  130. 
SETTLEMEN^^— Demanding,  198, 
199. 

Ships — ^Measuring  capacity  of, 

348. 

Shipments — Controlling,  285; 
Destination  of,  229;  Econ- 
omies in,  122;  Methods  of. 
144;  Retnm  of,  208;  Settie- 
ment  for,  137;  Clearance  of, 
237;  Delayed,  277.  130.  Fi- 
nancing, 289,  296.  300;  Handl- 
ing, 230;  Methods  of  financ- 
ing, 278;  Packing  for,  888; 
Surtax  on,  238. 

Shippers  Export  Declara- 
tion—Presentation  of,  232; 
Preparation  of,  282;  Attest- 
ing, 232. 

Shipping — Advantages  in,  129; 
Dependence  on  foreign,  130; 
Difficulty  in,  229;  Experience 
in,  30;  Method  of,  229;  Prog- 
gress  of  American,  846; 
Sharing  charges  of,  117. 

Ships— Condition  of,  235;  Qual- 
ity of  American-buill^  346; 
Use  of,  888. 

SmFVARDS — Output  of  Amer- 
ican, 845;  Work  in  American, 
845. 

Signature — Importance  of  writ- 
ten, 68;  Rubber  stamp,  63; 
Typewritten,  63. 

Spain — Commercial  travelem  in 
46;  Duties  in,  227. 

SnciAL  EzPOKT  Edition— Ad- 
vantages of,  79;  Use  of,  79; 
Waning  popularity  of,  79. 

Specialties — Field  for,  131. 

Standing  Credit  —  Investiga- 
tion of,  24,  101;  Judging  of, 
168. 

Stationery  —  Good  taate  in, 
68;  Quality  of,  68. 

Symbols  —  Qualifying,  144; 
Use  of,  144,  227. 

Sweden — Commercial  travelers 
46;  Duties  in,  227. 

Switzerland — Commercial  trav- 
elers in,  46;  Duties  in,  227. 

Tariff— Preferential,  116;  Par- 
agraghs  of,  33;  Requirements 


430  i:^ 

Technique— Export,  29;  Study 

of  export,  150. 
Terms— Cash,  175;  Necessity  of 

set,  158. 

TkncET€BT--Limited,  112. 

Tbai» — AutKorities  on,  87; 
Bnildiiig  Anmiaui  fovdgn. 
114;  Cash  terms  in  export, 
276;  Character  of  export, 
180;  Combination  in  foreign, 
114,  117;  Competing  for,  117; 
Damage  to  American  foreign, 
215;  Demands  of,  132;  Der 
velopment  of,  128,  132,  148, 
164;  Engaging  in  foreign, 
299;  Expansion  of,  362;  Fac- 
ilitating, 159;  Financing, 
274;  Growth  of  American  ex- 
port, 164,  95;  Handicaps  of 
American  export,  312;  Mid- 
dlemen in  export,  90;  Organ- 
iwtioii  for  export,  130,  179; 
Permanency,  201;  Policy  of, 
124;  Problems  of  foreign,  80; 
Quotations  in  export,  144. 

TkADEMARKS — Establishment  of 
international,  395;  Bureau  of, 
8M;  Plra^  of,  888,  S89; 
Pratoctkm  of,  889,  898; 
timmf  ef;  89l»  89S» 


Translations — Purpose  of,  66; 
Style  of,  $7:  Efficiency  in 
making,  84;  Obtaining  pnq^ 
er,  64;  Perfection  of,  84. 

Translators — Qualifications  of 
competent,  65;  Views  of  pro- 
fessional, 65;  Classes  of,  66; 
Need  of  eompetent,  66. 

TRANsraffAtiON— Gooditioiia  in 

216. 

Underwriters — History  of  253. 

UNmD  KiNCDMM— Ckmunerdal 
Travelers  in,  46. 

United  States  Bureau  op  For- 
eign AND  Domestic  Com- 
merce— Publication  of,  28. 

UMinD  STATW  DVAKnONT  OP 
COMMERCEr:-68. 

Uruguay  —  Commercial  travel- 
ers in,  48;  Duties  in,  226. 

Vbnbzusla — Commercial  trav- 
elen  in,  48;  Duties  in,  228. 

Warmbouam  — -  ISalabliilimcnt 
of,  131. 

Webb-Pomerene  Law— Concern 
caused  by,  114;  Criticism  of, 
114;  Defense  of,  114;  Effect 
of,  115;  Power  conferred  by, 
124;  Provisions  of,  114;  Re- 
sults of,  122;  Summarized  ad- 
vantages Qf,  121;  Teeth  in. 


COLUMBIA  UNIVEILMTY  UBRARIES 


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